internal rate of return


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Related to internal rate of return: Net present value, Payback period

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 ?
From this point of view, decision of investment of a certain amount of financial funds, in order to build up a certain investment project, will be adopted only if it can be verified opportunity cost of capital is smaller than internal rate of return (4).
The value of the Internal Rate of Return (IRR) of the Daphar irrigated plantation was 45.83 %.This value was highly reasonable especially for long rotation and allocation of poor land for the plantation.
The value of r, which causes the stream of benefits [B.sub.t] (from period 1 to period N), discounted by interest rate r to equal the initial investment (I), is defined as the internal rate of return; that is, the solution value of r in the equation above is the internal rate of return.
The Appendix provides the formulas for the expected net present value and the expected internal rate of return. Basically, for a representative individual in a group (defined by birth year, family type, race, and education level), OASI is a stochastic combination of tax payments and benefit receipts being determined by the age of death.
Project B is preferable to Project A in terms of both net present value and internal rate of return.
By doing so, we hope to supply useful knowledge to accounting, economic, and finance practitioners about how to determine multiple internal rate of return solutions in capital budgeting decisions.
Main Street realized a gain of approximately USD17.9 million on the exit of its equity investment in Travis, and on a cumulative basis since Main Street's initial investment in Travis in August of 2013, Main Street realized a total internal rate of return of 56.7% and a 3.9 times money invested return on its equity investment in Travis.
Dubai: Tadhamon Capital said on Sunday it has successfully exited from an accomodation property in London with an Internal Rate of Return (IRR) of more than 25 per cent much higher than the originally projected returns of 16.5 per cent.
Christian Mouchbahani, of Dubai-based financier M Capital Group, argued that an initial seed investment "is projected to provide over 40% IRR's (internal rate of return) in less than five years".
ISLAMABAD -- ,,, Federal Minister for States and Frontier Regions (SAFRON) Lt Gen A(r) Abdul Qadir Baloch Thursday informed the Upper House that Independent Power Producers (IPPs) pertaining to thermal power, had been allowed 15 percent Internal Rate of Return (IRR) equity based on dollar on the portion of equity investment of total project cost.
The acquisition, valued at C$1.3 billion (PS708 million), is modestly accretive2 to earnings per share in the first year, and has an internal rate of return of approximately 15%.
The deal should provide a projected average annual cash yield of 7.5 per cent and a projected internal rate of return of 9.5 per cent over a three-year holding period to investors in the transaction.

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