foxex: What is 'Internal Rate of Return

Sunday, June 30, 2019

What is 'Internal Rate of Return - IRR'?

Internal rate of return (IRR) is a metric used in capital budgeting to estimate 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.

Breaking it Down:

You can think of internal rate of return as the rate of growth a project is expected to...

Related to "Internal Rate of Return - IRR"

Calculating IRR with Excel

Find out how to calculate the internal rate of return on investments using Microsoft Excel, as illustrated in different investment scenarios.

How do hurdle rate MARR and internal rate of return IRR relate?

In capital budgeting, projects are evaluated by comparing the internal rate of return (IRR) to the hurdle rate, also known as the minimum acceptable rate of return (MARR).

An Introduction To Capital Budgeting

We look at three widely used valuation methods and figure out how companies justify spending.

Related Definitions

Required Rate Of Return - RRR

The required rate of return is the minimum return an investor will accept for an investment or project, that compensates them for a given level of risk.

Conventional Cash Flow

Conventional cash flow is a series of inward and outward cash flows over time in which there is only one change in the cash flow direction.

Annuity Method of Depreciation

The annuity method of depreciation is a process used to calculate depreciation on an asset by calculating its rate of return as if it was an investment.

Capital Budgeting

Capital budgeting is the process in which a business determines and evaluates potential large expenses or investments.