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Internal Rate of Return

Estimates the annualized return that makes a project break even.

Interactive inputs coming — use the formula and example below.

Rechenbeispiel

Compare IRR with your required return to decide.

So funktioniert's

  • Use the formula below with your own figures.

Die Formel

IRR is the rate where NPV equals zero.

Rechenbeispiel

Compare IRR with your required return to decide.

Häufige Fragen

IRR vs NPV?

IRR is a rate; NPV is a value.

Higher IRR better?

Usually, but check the assumptions.

Tipps

  • Know your break-even before scaling spend.
  • Separate margin from markup when pricing.
  • Discount future cash flows to value projects.

Begriffe

Break-even
Where revenue covers costs.
Margin
Profit as a percent of price.
NPV
Discounted value of future cash flows.