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Internal rate of return : ウィキペディア英語版 | Internal rate of return
The internal rate of return (IRR) or economic rate of return (ERR) is a rate of return used in capital budgeting to measure and compare the profitability of investments. It is also called the discounted cash flow rate of return (DCFROR).〔Project Economics and Decision Analysis, Volume I: Deterministic Models, M.A.Main, Page 269〕 In the context of savings and loans, the IRR is also called the effective interest rate. The term ''internal'' refers to the fact that its calculation does not incorporate environmental factors (e.g., the interest rate or inflation). ==Definition==
The internal rate of return on an investment or project is the "annualized effective compounded return rate" or rate of return that makes the net present value (NPV as NET *1/(1+IRR)^year) of all cash flows (both positive and negative) from a particular investment equal to zero. It can also be defined as the discount rate at which the present value of all future cash flow is equal to the initial investment or in other words the rate at which an investment breaks even. In more specific terms, the IRR of an investment is the discount rate at which the net present value of costs (negative cash flows) of the investment equals the net present value of the benefits (positive cash flows) of the investment.
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