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  • 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.

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