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.
The internal rates of return for black and white single men appear in Figure 3.
The internal rates of return remain unchanged, but there is a reversal in the net present values of the two projects.
This paper investigates the utility of certain existing rules for the identification of non-imaginary internal rates of return in the capital budgeting process.
It identified 43 opportunities for which the projected real internal rates of return "above inflation-ranged from four to more than 25 percent.
Rather than looking primarily to the comparable market prices or rates on similar transactions, it placed greater emphasis on the relative internal rates of return generated by the parties to the transaction.
These funds also buy policies from the United Kingdom and Germany, but those purchases make up only a small part of the life-settlements market because they are endowment--or with-profits--policies (they mature over a specific term), and are arbitrage plays on their internal rates of return rather than mortality plays, as with U.S.
We have assembled an extremely strong team, one dedicated to a relationship-oriented approach to investing, and one able to execute complex transactions earning above-market leveraged internal rates of return."
Topics will include Internal Rates of Return, Net Present Value, Discounted Cash Flow Analysis, Capitalization, Securitization and 1031 Property Exchanges.
Assuming the settlement price is the probabilistic price of about $152,200, internal rates of return can be calculated from the cash flows for each future lifetime.
But, he claims, it has allowed them to generate internal rates of return "north of 35 percent" based on short-term holding periods.
These funds, which purchased billions of dollars of real estate in the early 1990's, will step-up their sales activity, as pressure dictates that they stick to business plans and maximize internal rates of return. This trend has a double-edged impact on the investment sales market.

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