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What is Internal Rate of Return?
The discount rate that makes an investment's net present value zero; a measure of investment profitability.
ExampleThe project's IRR is 18%; with a cost of capital of 12%, the investment clears the hurdle.The figures in the example illustrate the concept; they are not current market data.
Related terms
Discounted Cash FlowA method that values a company by discounting its future cash flows to their present value.Discount RateThe rate used to discount future cash flows to today; it reflects risk and the time value of money.Income StatementThe financial statement that shows a company's revenue, expenses and profit over a given period.Insider TradingBuying or selling shares using company information that has not yet been made public.
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Frequently asked questions
What is Internal Rate of Return?
The discount rate that makes an investment's net present value zero; a measure of investment profitability.
What is Internal Rate of Return called in Turkish?
In Turkish financial reporting and news, Internal Rate of Return is called İç Verim Oranı (IRR).
Which concepts are related to Internal Rate of Return?
The concepts most often mentioned together with Internal Rate of Return are Discounted Cash Flow and Discount Rate.
More terms in Fundamental analysis
Active ManagementAlpha (α)ArbitrageAsset AllocationBalance SheetBear MarketBeta (β)BondBull MarketCapital Expenditure (Capex)Cash FlowCorrelationDilutionDiversificationDividendDividend YieldEarnings Per ShareEarnings ReleaseEarnings SurpriseEnterprise Value (EV)EquityEV/EBITDAFair ValueGross Profit MarginGrowth StockHigh-Frequency Trading (HFT)Investment InstrumentsLeverageLiquidityMargin CallMarket CapitalizationNet Profit MarginOpen PositionP/B Ratio (Price-to-Book)P/E Ratio (Price-to-Earnings)PortfolioReturn on AssetsReturn on EquitySharpe RatioShort PositionSpreadStop-LossStop-Loss OrderValue StockVolatilityWeighted Average CostWeighted Average Cost of Capital