Reveal the appraisal method boosting your investment returns
Internal Rate of Return (IRR) and Its Relevance
The Internal Rate of Return (IRR) is another critical appraisal method that calculates the discount rate at which the NPV of an investment becomes zero. This rate helps investors compare the profitability of different projects. A project with an IRR higher than the required rate of return is considered favorable. IRR is particularly useful when comparing projects with different scales and timelines2.