Internal Rate of Return (IRR)

IRR Definition The Internal Rate of Return is the discount rate which makes the Net Present Value(NPV) of all cash flows from a project equal to ‘zero’. Internal Rate of Return can also be defined as the return on investment. Explanation Internal Rate of Return...

Internal Rate of Return (IRR)

Some firms calculate the net present value NPV of a project for knowing its work and few firms prefer to calculate the internal rate of return (IRR) to know whether project’s return is lower or greater than the opportunity cost of given project’s capital. For example,...