Internal Rate of Return
The rate of interest at which the present value of expected net cash flows from a project equals its initial cash outlays; a measure of the rate of profit per dollar of investment. In evaluating a proposed investment, the internal rate of return is computed to the minimum desired rate of return to determine whether a project should be accepted or rejected. If the internal rate of return is equal to or greater than the minimum desired rate of return, the project is desirable. If not, the project is not desirable.
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