Term of the Day: Internal Rate Of Return - IRR

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	INVESTOPEDIA Term Of The Day November 8, 2015 Internal Rate Of Return - IRR A metric used in capital budgeting measuring the profitability of potential investments. Internal rate of return is a discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero. IRR calculations rely on the same formula as NPV does. Generally speaking, the higher a project's internal rate of return, the more desirable it is to undertake the project. IRR is uniform for investments of varying types and, as such, IRR can be used to rank multiple prospective projects a firm is considering on a relatively even basis. Assuming the costs of investment are equal among the various projects, the project with the highest IRR would probably be considered the best and undertaken first. IRR is sometimes referred to as "economic rate of return" (ERR). Breaking It Down: You can think of IRR as the rate of growth a project is expected to generate. While the actual rate of return that a given project... Read More Related to "Days Sales Outstanding - DSO" How To Calculate Your Investment Return Which annual investment return would you prefer to have: 9% or 10%? All things being equal, of course, anyone would rather... Read More Return on Sales Return on Sales is a financial ratio that is used to measure a company's performance. It is calculated as operating profit... Read More FYI On ROI: A Guide To Calculating Return On Investment An investor cannot evaluate any investment, whether it's a stock, bond, rental property, collectible or option... Read More Recently Added Definitions Term Deposit A term deposit is a deposit held at a financial institution that has a fixed term. These are generally short-term with... Read More Behavioral Funds Behavioral funds are a category of mutual funds that use behavioral finance as a basis for their... Read More Related Definitions Discounted Cash Flow (DCF) Return On Investment - ROI Return On Capital Employed (ROCE) Return On Equity - ROE Overnight Return Past Terms of the Day International Financial Reporting Standards - IFRS EBITA Earnings Before Interest & Tax - EBIT Days Sales Outstanding - DSO Days Sales Of Inventory - DSI You are currently subscribed as: mondemand.forex@blogger.com Unsubscribe | Manage Subscriptions Investopedia US, A Division of IAC. Copyright © 2015, Investopedia, LLC. All Rights Reserved Follow Us: