What is the internal rate of return?
The IRR is the discount rate that gives a proposal a present value of zero. It is often used by firms to determine whether they should make an investment. It can be used rank proposals. An investment should be undertaken if the IRR is greater than the rate of return that could be earned by alternative investments of equivalent risk (i.e. bonds, bank accounts, other projects etc.).
Related Questions
- Is the Internal Rate of Return calculated on an individual energy conservation measure basis, or on a total project basis?
- What happens if construction costs are higher than those estimated, which would lead to a lower Internal Rate of Return?
- How Do You Calculate The Internal Rate Of Return Using Excel?
