Internal rate of return, or IRR, is one of the most popular methods of evaluating potential projects. Learn more about this important metric.

View a video below by Investopedia on calculating/understanding IRR.  Also there is a pdf of their article on calculating IRR found below the video.

“The internal rate of return (IRR) is a core component of capital budgeting and corporate finance. Businesses use it to determine which discount rate makes the present value of future after-tax cash flows equal the initial cost of the capital investment. Or, to put it more simply: What discount rate would cause the net present value (NPV) of a project to be $0? If an investment will require capital that could be used elsewhere, the IRR is the lowest level of return from the project that is acceptable in order to justify the investment…”

Contributors: Investopedia
Categories: SIG U Resource, Tool
SRC Type: Benchmarking and Analysis, Procurement Operations, Sourcing, Strategy