internal financial definition of internal. internal finance term by the Free Online Dictionary.

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

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.

Internal Rate of Return (IRR)

What Does Internal Rate of Return Mean?

The discount rate often used in capital budgeting that makes the net present value of all cash flows from a particular project equal to zero. Generally, the higher a project's internal rate of return is, the more desirable it is to undertake. Thus, IRR can be used to rank potential projects. Assuming all factors are equal, the project with the highest IRR probably would be considered the best and would be undertaken first. IRR sometimes is referred to as the economic rate of return (ERR).

Investopedia explains Internal Rate of Return

One can think of IRR as the rate of growth a project is expected to generate. Although the actual result may differ from the estimated IRR rate, a project with a substantially higher IRR value than other available options still will provide a much better chance for strong growth. IRRs also can be compared against prevailing rates of return in the securities market. If a firm cannot find any projects with IRRs greater than the returns that can be generated in the financial markets, it may choose to invest its retained earnings in the market.

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Allocative Efficiency Annuity Method of Depreciation Basic IRR Rule Capital Budget Capital Budgeting Cost of Lease Financing discounted cash flow Dollar-Weighted Rate of Return Incremental Internal Rate of Return Intermarket Sector Spread IRR J Curve J-Curve Modified Internal Rate of Return Multiple Rates of Return payback period Planned Capital Expenditure Program Present Value Interest Factor Risk-Free Rate of Return	Intermarket Spread Intermarket Spread Swap Intermarket Spread Swaps Intermarket Surveillance Information System Intermarket Trading Intermarket Trading System Intermediacion financiera Intermediario Intermediario a comision Intermediario a commissione Intermediario commerciale Intermediario di titoli Intermediario financiero Intermediary Intermediate Bond Intermediate Target Intermediate Targets intermediate theory state Intermediate Trend Intermediate-Term Intermediate-Term Bond Intermediated Market intermediation Intermittency Intermodal Container Transfer Facility internal Internal Audit Internal Audit and Risk Compliance Service Internal Auditor Internal Balance Internal Expansion Internal Finance Internal Financing Internal Funds Internal Growth Rate Internal Market Internal Measure internal rate of return Internal Revenue Code Internal Revenue Service Internal Revenue Service Restructuring and Reform Act of 1998 Internalization Internalize Internally Efficient Market International Accounting Standards International Accounting Standards Board International Accounting Standards Committee International Accounting Unit International Accreditation Forum International Air Transport Association International Anti-Bribery Act of 1998	intermutule intern intern intern intern intern Intern architect Intern Development Program Intern Development Program Intern Development Program (IDP) intern in Intern in Marriage and Family Therapy Intern Leadership Development Course Intern Progress Note Intern Registration Program Internacia Asocio de Esperantistaj Matematikistoj Internacia Fervojista Esperanto-Federacio Internacia Infana Kongreso Internacia Jaro por la Kulturo de Paco Internacia Junulara Kongreso Internacia Junulara Semajno Internacia Katolika Unuigho Esperantista Internacia Komerca Ekonomia Fakgrupo Internacia Komunista Esperantista Kolektivo Internacia Kongresa Universitato Internacia Naturista Organizo Esperantista Internacia Perfektiga Koresponda Kurso Internado Nacional Barros Arana Internaional Conference on Virtual Storytelling internal internal abdominal abscess internal abdominal abscess internal abdominal abscess internal abdominal abscess Internal abdominal oblique Internal abdominal oblique muscle internal absorptance internal absorption Internal Acceptance Test Internal Access Control Mechanism Internal accountancy Internal acoustic meatus Internal acoustic meatus Internal acoustic meatus Internal acoustic meatus internal acoustic pore Internal Active Thermal Control System Internal Address Block Internal Address List internal adhesive pericarditis Internal affairs Internal Affairs Bureau Internal Affairs Division Internal Affairs Ministry Internal Agency for Research on Cancer Internal Air Quality Internal Airlift/Helicopter Slingable-Container Unit Internal Alarm Internal anal sphincter Internal Anal Sphincter Dysfunction

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