Difference between revisions of "Internal rate of return"
| Line 7: | Line 7: | ||
According to [[Managerial Accounting by Braun, Tietz (5th edition)]], | According to [[Managerial Accounting by Braun, Tietz (5th edition)]], | ||
:[[Internal rate of return]] ([[IRR]]). The rate of return (based on discounted cash flows) that a company can expect to earn by investing in a capital asset. The interest rate that makes the NPV of the investment equal to zero. | :[[Internal rate of return]] ([[IRR]]). The rate of return (based on discounted cash flows) that a company can expect to earn by investing in a capital asset. The interest rate that makes the NPV of the investment equal to zero. | ||
| + | According to the [[HRBoK Guide]], | ||
| + | :[[Internal rate of return]]. A way of measuring profits. A calculation of the average return each year during the life of an investment. | ||
==Related concepts== | ==Related concepts== | ||
| Line 14: | Line 16: | ||
*[[Introduction to Financial Management]]. | *[[Introduction to Financial Management]]. | ||
| − | [[Category: Financial Management]][[Category: Articles]][[Category: Accounting]] | + | [[Category: Financial Management]][[Category: Articles]][[Category: Accounting]][[Category: Management]] |
Latest revision as of 19:17, 20 July 2020
Internal rate of return (also known by its acronym, IRR) is the discount rate that forces a project's NPV to equal zero.
Definitions
According to Fundamentals of Financial Management by Eugene F. Brigham and Joel F. Houston (15th edition),
- Internal rate of return (IRR). The discount rate that forces a project's NPV to equal zero.
According to Managerial Accounting by Braun, Tietz (5th edition),
- Internal rate of return (IRR). The rate of return (based on discounted cash flows) that a company can expect to earn by investing in a capital asset. The interest rate that makes the NPV of the investment equal to zero.
According to the HRBoK Guide,
- Internal rate of return. A way of measuring profits. A calculation of the average return each year during the life of an investment.
Related concepts
- Financial management. A combination of enterprise efforts undertaken in order to procure and utilize monetary resources of the enterprise.
