The discount rate refers to the interest rate used when calculating the net present value (NPV) of an investment. It represents the time value of money, which is the concept that a sum of money today ...

Daniel Jassy, CFA, is an Investopedia Academy instructor and the founder of SPYderCRusher Research. He contributes to Excel and Algorithmic Trading. David Kindness is a Certified Public Accountant ...

IRR measures the rate needed to break even on an investment. Calculate IRR by setting NPV to zero and solving for the discount rate. Use Excel's IRR function by inputting initial cost and cash inflow.

Calculating the internal rate of return, or IRR, of an investment is a powerful tool for businesses. When a manager is faced with a capital intensive decision, IRR can quickly compare the financial ...

IRR calculates a project's average expected return by setting NPV to zero. Excel's XIRR function can compute project IRRs to help select profitable options. IRR overlooks cash flow accuracy and other ...

Q. I have prepared projections for a proposed project, and I want to calculate the internal rate of return. Instead of using Excel’s IRR function, should I use simple math formulas so others can ...

Nick Lioudis is a writer, multimedia professional, consultant, and content manager for Bread. He has also spent 10+ years as a journalist. Thomas J Catalano is a CFP and Registered Investment Adviser ...

The internal rate of return, or IRR, allows investors to analyze the profitability of investments and companies to analyze the profitability of capital outlays. The easiest way to understand IRR is by ...