incremental internal rate of return

Definition

In the analysis of two investment alternatives (one more expensive than the other), the return on the additional cost. It is computed as the internal rate of return (IRR) on the additional (incremental) cash flow. In this analysis, the alternative with an incremental internal rate of return higher than the minimum acceptable rate of return is considered the better choice.

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You should always try and predict what the INCREMENTAL INTERNAL RATE OF RETURNwill be to know if you should try this investment.

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We spent the better part of the day crunching the numbers on the incremental internal rate of return before coming up with a solid figure that satisfied us.

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My boss recommended that we invest in the corporate junk bonds because his analysis showed that we would receive a higher incremental internal rate of return on the investment.

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