Internal Rate of Return
Definition
IRR. The rate of return that would make the present value of future cash flows plus the final market value of an investment or business opportunity equal the current market price of the investment or opportunity. The internal rate of return is an important calculation used frequently to determine if a given investment is worthwhile. An investment is generally considered worthwhile if the internal rate of return is greater than the return of an average similar investment opportunity, or if it is greater than the cost of capital of the opportunity. also called dollar-weighted rate of return.
Use this term in a sentence
“ You should always know what the internal rate of return will be when you are deciding if you want to do the deal. ”
“ The internal rate of return was sufficiently high enough to approve the project to be extended for another quarter pending another reassessment. ”
“ The internal rate of return on project B is almost 2% higher that project A which means we should invest more of our time and resources to making sure project B starts on time and without a hitch. ”
