IRR stands for Internal Rate of Return and is a financial metric used to measure the profitability of an investment. It is calculated by taking the present value of all cash flows from the investment and dividing it by the initial investment. IRR is used to compare the profitability of different investments and to determine whether an investment is worth making.
An IRR calculator is a tool used to calculate the internal rate of return (IRR) of an investment. It is used to determine the profitability of a project or investment by calculating the rate of return on the invested capital. The IRR calculator takes into account the initial investment, the expected cash flows, and the time period of the investment.
1. Calculate the net present value (NPV) of all cash flows. 2. Set the NPV equal to zero and solve for the discount rate (r). 3. The discount rate (r) is the internal rate of return (IRR).
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