What is Internal Rate of Return (IRR)?

  

• The discount rate which makes the Present value of the Project’s Future Cash flows equal to the cost of the Project. 
  
• A project is accepted if its IRR is > the required rate of return.
  
• Generally found by trial and error, interpolation method or financial calculator.
  
• IRR is the discount rate that forces PV inflows = cost.  This is the same as forcing NPV = 0