Understanding Internal Rate of Return The internal rate of return (IRR) is a financial metric used by companies and investors to estimate the return expected over the life of an investment. The ...

Internal rate of return is a method of calculating the future profitability of a potential investment. It’s closely affiliated with net present value (NPV): the difference between cash inflows and ...

The internal rate of return, or IRR, allows investors to analyze the profitability of investments and companies to analyze the profitability of capital outlays. The easiest way to understand IRR ...

One of those tools is internal rate of return, or IRR. The IRR measures how well a project, capital expenditure or investment performs over time. The internal rate of return has many uses.

2. Excel’s XIRR function. Excel’s XIRR function calculates a more accurate internal rate of return because it takes into consideration different-size time periods. To use this function, you must ...

IRR measures the rate of return of projected cash flows generated by your capital investment. The IRR for each project under consideration by your business can be compared and used in decision-making.

Example Let me pose an exaggerated theoretical example of why you should evaluate managers using the time weighted rate of return rather than the IRR. Let’s say you have two managers, A and B ...

From there, you can determine a project's internal rate of return and weigh if that rate is worth pursuing. Here's an example: Say you're on the fence about purchasing a $100,000 piece of equipment.

From there, you can determine a project's internal rate of return and weigh if that rate is worth pursuing. Here's an example: Say you're on the fence about purchasing a $100,000 piece of equipment.

What is an Internal Rate of Return (IRR)? In layman’s terms, IRR is the rate at which an investment breaks even and becomes lucrative. If you invest $3,000 today and expect it to generate $500 ...