The Internal Rate of Return (IRR) is a measurement that tells us the time value of the investment that also factors in the time over which the investment is made. A higher IRR naturally is better because it is better to get paid today than over 5 years.
The Internal Rate of Investment as a measurement helps to compare the profitability of new ventures and operations compared to existing operations. For example, a business can decide to use the metric IRR when trying to deliberate whether to open a new shop or to renovate and expand an existing power plant.
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