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!

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