What is internal rate of return (IRR)?
How can I find the IRR of cash flows?
Does a project always have a unique IRR?
Are there conditions that guarantee a project will have a unique IRR?
If two projects both have a single IRR, how do I use the projects’ IRRs?
How can I find the IRR of irregularly spaced cash flows?
The net present value (NPV) of a sequence of cash flows depends on the interest rate (r) used. For example, if we consider cashflows for projects 1 and 2 (see the worksheet IRR in the file IRR.xls, shown in Figure 9-1), we find that for r = 0.2, project 2 has a larger NPV, and for r = 0.01, project 1 has a larger NPV. When we use NPV to rank investments, the ranking of investments can depend on the interest ...