Capital Budgeting
Internal Rate of Return
Definition
What is Internal Rate of Return?
The discount rate that makes a project's net present value equal to zero.
Example in practice
How This Looks in Practice
A project with 18% IRR exceeds a company's 14% hurdle rate.
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Related Terms
Capital Budgeting
Net Present Value
Present value of expected cash inflows minus present value of expected cash outflows.
Capital BudgetingModified Internal Rate of Return
A return measure that uses specified financing and reinvestment rates rather than assuming reinvestment at the IRR.
Capital BudgetingPayback Period
The time required for cumulative cash inflows to recover the initial investment.
Company DisclosuresAnnual Report
A yearly publication containing financial statements, management discussion, governance information, and other disclosures.