Management Glossary

  Search Results: internal rate of return
internal rate of return

The interest rate that, if it were used in a net present value (NPV) calculation for all future cash flows associated with a project, would result in an NPV of zero.

Usually abbreviated as IRR.

The IRR estimate can be valuable when trying to select among a number of possible projects as the one with the highest IRR will produce the greatest value for the company (after considering the time value of money).

Contributed by: Managerwise Staff
See: net present value

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