Engineering ToolBox - Resources, Tools and Basic Information for Engineering and Design of Technical Applications!

Internal Rate of Return - IRR

Internal Rate of Return (IRR) - the break-even interest rate.

Sponsored Links

A primary measure of an investments worth (or value) is based on yield and known as the internal rate of return - IRR .

The internal rate of return can be defined as the break-even interest rate which equals the Net Present Worth - NPW - (Net Present Value) of a project in and out cash flows.

P(i rr ) = F cash_in - F cash_out

= 0                    (1)

where

P = Present Worth (Value)

i rr = internal rate of return

F cash_in = future cash flow in ( discounted )

F cash_out = future cash flow out ( discounted)

(1) can be expressed as

P(i rr ) = F 0 / (1 + i rr ) 0 + F 1 / (1 + i rr ) 1 + F2/(1 + i rr )2+ .... + F n /(1 + i rr ) n

= 0                    (2)

where

F 0..n = cash flow in period 0 to n (positive value for cash flow in - negative value for cash flow out)

For a given cash flow equation (2) can be solved by iteration.

Internal Rate of Return Diagram

Cash Flow Internal Rate of Return Calculator

  • money out - negative values
  • money in - positive values

Cash Flows - Period

Present Value of Future Payment chart

Download and print Present Value of Future Payment chart

Minimum Attractive Rate of Return - MARR

Minimum Attractive Rate of Return - MARR - represents the required or minimum acceptable Internal Rate of Return for a project investment.

Sponsored Links

Related Topics

  • Economics

    Engineering economics - cash flow diagrams, present value, discount rates, internal rates of return - IRR, income taxes, inflation.

Related Documents

Sponsored Links

Search

Search is the most efficient way to navigate the Engineering ToolBox.

Engineering ToolBox - SketchUp Extension - Online 3D modeling!

3D Engineering ToolBox Extension to SketchUp - add parametric components to your SketchUp model

Add standard and customized parametric components - like flange beams, lumbers, piping, stairs and more - to your Sketchup model with the Engineering ToolBox - SketchUp Extension - enabled for use with older versions of the amazing SketchUp Make and the newer "up to date" SketchUp Pro . Add the Engineering ToolBox extension to your SketchUp Make/Pro from the Extension Warehouse !

Translate this Page

Translate this page to Your Own Language .

About the Engineering ToolBox!

Privacy Policy

We don't collect information from our users. More about

Citation

This page can be cited as

  • The Engineering ToolBox (2008). Internal Rate of Return - IRR. [online] Available at: https://www.engineeringtoolbox.com/internal-rate-of-return-irr-d_1235.html [Accessed Day Month Year].

Modify the access date according your visit.

3D Engineering ToolBox - draw and model technical applications! 2D Engineering ToolBox - create and share online diagram drawing templates! Engineering ToolBox Apps - mobile online and offline engineering applications!

Unit Converter

















































3.15.9

Sponsored Links
.