Internal rate of return
Internal rate of return (also known by its acronym, IRR) is the discount rate that forces a project's NPV to equal zero.
Definitions
According to Fundamentals of Financial Management by Eugene F. Brigham and Joel F. Houston (15th edition),
- Internal rate of return (IRR). The discount rate that forces a project's NPV to equal zero.
According to Managerial Accounting by Braun, Tietz (5th edition),
- Internal rate of return (IRR). The rate of return (based on discounted cash flows) that a company can expect to earn by investing in a capital asset. The interest rate that makes the NPV of the investment equal to zero.
According to the HRBoK Guide,
- Internal rate of return. A way of measuring profits. A calculation of the average return each year during the life of an investment.
Related concepts
- Financial management. A combination of enterprise efforts undertaken in order to procure and utilize monetary resources of the enterprise.
