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Internal rate of return (IRR) is a method of calculating an investment's rate of return. The term internal refers to the fact that the calculation excludes external factors, such as the risk-free rate, inflation, the cost of capital, or financial risk. The method may be applied either ex-post or ex-ante. Applied ex-ante, the IRR is an estimate ...
The time-weighted rate of return measures how your investments have performed in a vacuum. Basically, for the assets that you purchased, it determines how much have they gained or lost value.
The internal rate of return (IRR) (which is a variety of money-weighted rate of return) is the rate of return which makes the net present value of cash flows zero. It is a solution r {\displaystyle r} satisfying the following equation:
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Internal rate of return; Marketing plan; Price–earnings ratio; Rate of profit; Rate of return (RoR), also known as 'rate of profit' or sometimes just 'return', is the ratio of money gained or lost (whether realized or unrealized) on an investment relative to the amount of money invested; Return on assets (RoA) Return on brand (ROB)
IRR is not a profitability metrics. Since it is a discount rate at which NPV=0, it is a threshold that separates a good project from a bad project. If WACC is higher than IRR then NPV is negative and vice versa. —Preceding unsigned comment added by 164.114.248.33 17:39, 5 October 2010 (UTC)
Good debt is preferable because it builds value, but there are cases where bad debt is the best choice. For instance, using a loan to buy a reliable car to get you to and from work is a good use ...
One of these methods is the internal rate of return. Like the true time-weighted return method, the internal rate of return is also based on a compounding principle. It is the discount rate that will set the net present value of all external flows and the terminal value equal to the value of the initial investment. However, solving the equation ...