Internal rate of return (“IRR”)

The internal rate of return (“IRR”) is the annual percentage return achieved by a project, at which the sum of the discounted cash inflows over the life of the project is equal to the sum of the discounted cash outflows. A business that uses discounted cash flow techniques as a method of investment appraisal will often use a target IRR as a discount rate in evaluating potential investments or projects.

 

reference: Business Studies / Accounting. Accounts & Finance Glossary. Jim Riley BA(Hons) MBA FCA // tutor2u

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