Internal rate of return (IRR)

Internal Rate of Return (IRR) refers to the discount rate at which the present value of future cash flows of an investment has produced a breakeven on the cost of the investment. This can be determined when the net present value of the cash inflows (returns on the investment) equals zero, with the discount rate equal to the IRR. IRR is relevant to investors and companies as it is used as a metric for assessing the investment's profitability.

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