internal rate of return

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Internal rate of return (IRR)

Dollar-weighted rate of return. Discount rate at which net present value (NPV) of an investment is zero. The rate at which a bond's future cash flows, discounted back to today, equal its price.

Internal Rate of Return

The discount rate at which the cash inflow on an investment equals its cash outflow. That is, the internal rate of return is the return necessary for the present value of an investment to equal what one spends in making the investment. Importantly, the internal rate of return accounts for inflation. See also: Yield to maturity.

internal rate of return (IRR)

The rate of discount on an investment that equates the present value of the investment's cash outflows with the present value of the investment's cash inflows. Internal rate of return is analogous to yield to maturity for a bond.

internal rate of return

see DISCOUNTED CASH FLOW.

internal rate of return

see DISCOUNTED CASH FLOW.

internal rate of return

The annual rate of earnings on an investment equates the value of cash returns with the cash invested,taking into consideration the power of compounding interest.The following formula requires a trial-and-error method for solution. The fallacy with the method is its assumption that all cash flows are reinvested at the internal rate of return.

Using this formula,CF is the cash flow in each period,with one subpart of the formula for each investment year until you reach n,the final year of the investment.You have to solve for R, the annual rate, by trial and error.

References in periodicals archive ?
If the NVCA reports show VC fund internal rates of return of higher than 8 percent, I think it will be easier for the funds to go to their limited partners and raise fresh capital.
A standard protection for multiple internal rates of return is to use a modified IRR (MIRR) method.
Featuring easy-entry Cash Flow keys, Investor Plus allows users to enter up to 99 occurrences of 20 different cash flows; then calculate Net Present Values, Net Future Values, Internal Rates of Return and Modified Internal Rates of Return.
30 per pound returned very attractive Net Present Values (NPVs) and after-tax Internal Rates of Return (IRRs) of approximately 37 and 27 respectively.
The System posts internal rates of return, cash invested and returned, quarterly performance reports and general information on each of its general partners on the investment section on its Web site at www.
Moreover, the positive outlook on Prudential's financial strength ratings takes into account such actions, which are aimed at improving underperforming businesses so that they can meet targeted internal rates of return and reduce earnings volatility.
However, there are significant improvements to the cash flow and internal rates of return for the five year open pit base case mining program at US$325 per ounce gold.
REALHOUND also allows quick and easy valuation models to be produced including Proforma Analysis, Internal Rates of Return, Discounted Cash Flows and CAP Rates.

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