CALCULATION OF INTERNAL RATE OF RETURN (IRR) Internal rate of return (IRR) has to be ascertained when we assess the term loan proposal. It is the income generating capacity of the total funds used in the project over its life time. The ‘Internal Rate of Return’ (IRR) is that rate at which the sum of the discounted cash flows is equal to the investment outlay. In other words, IRR is that rate which makes the present value of the benefits equal to the present value of costs or reduces the net present value to zero.
No comments:
Post a Comment