Internal rate of return

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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.

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