Internal Rate of Return (IRR)

Archived in the category: Real Estate Terms & Definitions
Posted by admin on 11 Jul 11 - 1 Comment

Internal Rate of Return (annualized yield rate) is a rate which an investment will return over the estimated period of ownership. It is in fact the discount rate that produces NPV of zero and profitability index of 1.0. There are a few setbacks when using IRR, such as dual IRR in certain cases or problems with negative cash flows in the future.

There is no simple equation for calculating IRR, however when using some programming language for the calculation, the method of interval halving can be used. Fortunately for all of you, RealEstateAnalysisFREE software calculates IRR for you, in matter of seconds!

One comment for “Internal Rate of Return (IRR)”

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The Internal Rate of Return is the “Holy Grail” for serious Investors and it’s the most objective way to compare returns between investments! Excellent work & Thank You for saving us so much Time!!

April 30th, 2012 at 6:52 am

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