top of page
What is it used for: Calculates the rate of return on an investment that makes the net present value zero.
How it works: The IRR is the discount rate that makes the NPV equal to zero.
Calculation: Solve the equation that makes the NPV equal to zero.
Use: Useful for comparing the profitability of various investments.
Formula: Solving the equation NPV = 0 with the rate of return.
bottom of page