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Internal Rate of Return (IRR) is discount rate equating investment cost to present value of future cash flows; alternative to NPV.

सूत्र

Solve for discount rate where NPV = 0
NPV
0 — 0

चरण-दर-चरण मार्गदर्शिका

  1. 1Input initial investment and projected cash flows
  2. 2Solve for discount rate where NPV = 0
  3. 3Compare IRR to required return

हल किए गए उदाहरण

इनपुट
Invest $100k, receive $30k/year for 5 years
परिणाम
IRR ≈ 4.3% (modest return)
Accept if > required return

सामान्य गलतियां जिनसे बचना है

  • Multiple IRRs (non-standard cash flows)
  • Assuming reinvestment at IRR rate

अक्सर पूछे जाने वाले प्रश्न

IRR vs. NPV?

NPV better for comparing mutually exclusive projects; IRR useful for single projects.

सेटिंग्स