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 classic literature ?
The fever set up by his wound seemed to have taken a firm hold of his system, and to be complicated with an internal injury.
One estimates it thirty miles, because the internal heat, increasing at the rate of about one degree to each sixty to seventy feet depth, would be sufficient to fuse the most refractory substances at that distance beneath the surface.
The internal surface is completely vitrified, glossy, and smooth.
And many internal things in man are like the oyster--repulsive and slippery and hard to grasp;-
Planudes may have invented some few fables, or have inserted some that were current in his day; but there is an abundance of unanswerable internal evidence to prove that he had an acquaintance with the veritable fables of Aesop, although the versions he had access to were probably corrupt, as contained in the various translations and disquisitional exercises of the rhetoricians and philosophers.
Francis Vavassor, 15 a learned French jesuit, entered at greater length on this subject, and produced further proofs from internal evidence, from the use of the word Piraeus in describing the harbour of Athens, a name which was not given till two hundred years after Aesop, and from the introduction of other modern words, that many of these fables must have been at least committed to writing posterior to the time of Aesop, and more boldly suggests Babrias as their author or collector.
Uttering these words, the good lady pointed, distractedly, to the cupboard, and underwent a convulsion from internal spasms.
A more than ordinary redness in the region of the young gentleman's nose, and a kind of fixed wink in his right eye, denoted that he was in a slight degree intoxicated; these symptoms were confirmed by the intense relish with which he took his oysters, for which nothing but a strong appreciation of their cooling properties, in cases of internal fever, could have sufficiently accounted.
The attestation could include the company's general counsel and/or chief information officer if they are heavily involved in the system of internal control over financial reporting.
This article will clarify the role of the internal auditor, focusing on the core characteristics of the internal audit function; provide a description of five significant obstacles that taken singly or together can vitiate the internal audit function, plus suggested remedies; and discuss confidentiality and a recommendation regarding that essential pre-requisite for effective internal audit work.
Some of the more harrowing challenges include measuring the effectiveness of internal and external auditors; ensuring a corporate code of ethics; appointing qualified and independent committee members; ensuring the integrity of financial statements; and providing for effective feedback from stakeholders.
If ever there was a book that provides best practices for internal communication that are appropriate for all sizes and levels of organizations, this is it.

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