Internal Rate of Return Definition

Below please find a definition of “Internal Rate of Return”

Financial Analysis Training & Glossary TermsInternal Rate of Return: There are various investments that create fluctuating amounts of cash flow and for these kinds of investments the rate of return need to be determined. The method of determining the rate of return for these investments is termed as Internal Rate of Return. The formula for calculating IRR is complicated but a general formula that is in practice is as follows: Factor of internal rate of return = Investment required / Net annual cash inflow.

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