Internal Rate of Return
Definition
The discount rate at which a project's net present value is zero. Compared to the cost of capital to decide whether to invest.
Example
An IRR of 12% on a project beats a cost of capital of 8% — proceed.
The discount rate at which a project's net present value is zero. Compared to the cost of capital to decide whether to invest.
An IRR of 12% on a project beats a cost of capital of 8% — proceed.