About IRR (The Internal Rate of Return) you can write a lot. But most of all, you can write that topic is so difficult that many a hair bristles on the head at the thought of having to designate so-called IRR.

To begin with, the internal rate of return, generally speaking, is a method used to evaluate the so-called economic efficiency of investment projects. IRR can also be viewed in terms of financial indicator.

The basis and the inherent concept associated with the IRR is more fear inducing password: discounted cash flows (DCF). Since DCF is the basis of the IRR, it means that the IRR takes into account the changing value of money over time. Discounted cash flows define because the present value of future cash flows.

Internal rate of return (IRR) can be defined as a financial indicator that is de facto the discount rate at which the net present value (ang. Net Present Value, NPV), also referred to as net present value or net present value is equal to 0.

IRR as a method for the economic evaluation of the project indicates the profitability of that project (economic efficiency of the project takes place when the internal rate of return IRR is equal to or greater than the adopted rate limit - eg. to the real interest rate of the loan).

We hope that the concept of IRR, DCF and NPV will no longer be so terrible for you - especially when you do not have to worry about the enumeration of net present value, because the appropriate NPV calculator is made available to users 24iValue.

Main page Other posts