What is 'IRR'?

The internal rate of return (IRR) is a metric used in capital budgeting to estimate the profitability of potential investments. ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

Term of the Day | Words to Know Internal Rate of Return – IRR The internal rate of return (IRR) is a metric used in capital budgeting to estimate the profitability of potential investments. The 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. Read More » Related to "Internal Rate of Return – IRR" Internal Rate of Return: An Inside Look Often used by corporations to compare capital projects, the internal rate of return (IRR) can also help individuals evaluate investments, mortgages and other aspects of their financial lives. Read More » Calculating the Internal Rate of Return with Excel Find out how to calculate the internal rate of return on different investment scenarios using Microsoft Excel. Read More » SPONSORED BY INVESCO The Complete Guide to ETFs ETFs are becoming increasingly popular and soaring to new heights among investors. Invesco's insights can help you determine if these investment vehicles are right for you. Learn More » Return on Investment (ROI) Versus Internal Rate of Return (IRR) Find out the similarities and differences between the internal rate of return (IRR) and return on investment (ROI). Read More » Sign Up for 'The Market Sum' Want more Investopedia market news? Editor in Chief, Caleb Silver is here to you help you digest the days market moving events at the close of the bell. Subscribe» Related Definitions Capital Budgeting Capital budgeting is a process a business uses to evaluate potential major projects or investments. It allows a comparison of estimated costs versus rewards. Read More » Discount Rate The discount rate can refer to either the interest rate that the Federal Reserve charges banks for short term loans or the rate used to discount future cash flows in discounted cash flow (DCF) analysis. Read More » Net Present Value Net Present Value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows over a period of time. Read More » IRR Rule The internal rate of return (IRR) rule is a guideline for evaluating whether to proceed with a project or investment. Read More » CONNECT WITH INVESTOPEDIA Email sent to: mondemand.forex@blogger.com To update your newsletter preferences or unsubscribe, click here. 114 West 41st St, floor 8 New York NY 10036 © 2020, Investopedia, LLC, All Rights Reserved | Privacy Policy