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Topic: Internal rate of return

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	Economics Interactive Lecture: Internal Rate of Return
		The idea that better investments have higher internal rates of return is appropriate for comparing investments that have their costs first and their positive incomes later, and which have about the same initial costs.
		The internal rate of return is a measure of the worth of an investment.
		The internal rate of return falls to 5.31%, from the 5.47% it was before.
	hadm.sph.sc.edu /COURSES/ECON/irr/irr.html (4073 words)

	Internal rate of return - Wikipedia, the free encyclopedia
		The internal rate of return (IRR) is defined as the discount rate that gives a net present value (NPV) of zero.
		The IRR exists and is unique if one or more years of net investment (negative cash flow) are followed by years of net revenues.
		However, this is not the case because intermediate cash flows are almost never reinvested at the project's IRR; and, therefore, the actual rate of return (akin to the one that would have been yielded by stocks or bank deposits) is almost certainly going to be lower.
	en.wikipedia.org /wiki/Internal_rate_of_return (403 words)

	Attorney-CPA, The: Internal Rate of Return for Law Firm Financial Executives: A Simple, Non-Technical Explanation
		Thus, the internal rate of return informs the law firm, that the smaller the early investments and the earlier the returns are generated (assuming the early returns are equal in amount to the later returns), the better the internal rate of return.
		The internal rate of return informs the law firm of the rate of return of the investments made based on how much was invested, when it was invested, how much was returned, and when the return was received.
		For the investment returning all capital and profit in one year, the internal rate of return is 100%; for the investment returning capital and profit in fifty years, the internal rate of return is 1.4%.
	www.findarticles.com /p/articles/mi_qa3703/is_200501/ai_n13591541 (1130 words)

	Healthcare Financial Management: A better approach to internal rate of return - column (Site not responding. Last check: 2007-10-08)
		The internal rate of return is the discount rate equating the present value of a project's cash inflows to the present value of its costs, or outflows.
		An IRR greater than a project's cost of capital implies a positive NPV and a financially profitable project, as is the case of Project W with an IRR of 34.9 percent versus a cost of capital of 10 percent.
		Project W's modified IRR of 23.42 percent, on the other hand, forces the Years 1 to 3 cash flows to be reinvested at the project's 10 percent cost of capital and provides a more realistic measure of Project W's true rate of return.
	www.findarticles.com /p/articles/mi_m3257/is_n4_v43/ai_7497485 (1461 words)

	Internal rate of return (IRR)
		IRR has a simply stated definition: "The IRR for an investment is the discount rate for which the total present value of future cash flows equals the cost of the investment." It is the interest rate, that is that produces a 0 NPV.
		IRR has the most meaning when there is an initial net cash outflow, followed at least one period with a net positive cash inflow.
		IRR cannot be calculated with outflows only, or inflows only; IRR is thus not applicable to "cost only" analyses (such as the typical cost of ownership analysis).
	www.solutionmatrix.com /internal-rate-of-return.html (729 words)

	Social Security's Rate of Return
		However, even the best-case rate of return (5.37 percent for a single-earner couple with children in which the worker was born in 1932) lies below 7 percent, a conservative estimate of what economists estimate to be the long-range real rate of return on equities.
		However, in calculating the return, an amount is removed from taxes paid that is equal to the premium on a term life insurance policy which has the same value as benefits that are paid to children of workers (and the spouse caring for their children) who die before retirement.
		The annualized real rate of return on equities is assumed to be 5.7 percent, which lies at the lower boundary of professional estimates of the long-run returns to equities.
	www.heritage.org /Research/SocialSecurity/CDA98-01.cfm (8560 words)

	INTERNAL RATE OF RETURN
		If the internal rate of return can’t be solved for either because it does not exist, or is too big (or to large a negative number) the function will return :NA:.
		The number returned is the fractional interest rate per fiscal period and will always be in the range of -1 to +1.
		The use of a fiscal period allows the internal rate of return to be computed on a different time base than the model is on.
	www.vensim.com /documentation/html/22513.htm (690 words)

	Money: Investment Performance Calculated from Internal Rate of Return
		The Internal Rate of Return (IRR) is a standard accounting formula that provides a reliable way to compare the performance of different types of investments.
		The IRR is defined as the discount rate at which the present value of all cash flows related to an investment sum to zero.
		IRR can be equated to the bank interest rate that would give the same performance as the investment in question.
	support.microsoft.com /default.aspx?scid=kb;en-us;131664 (478 words)

	CCH Business Owner's Toolkit \| Internal Rate of Return
		If the internal rate of return is less than the cost of borrowing used to fund your project, the project will clearly be a money-loser.
		As an example of how the internal rate of return works, let's say you're looking at a project costing $7,500 that is expected to return $2,000 per year for five years, or $10,000 in total.
		IRR analysis is generally used to evaluate the project's cash flows, rather than the income from the project that would be shown on an income statement (also known as the profit and loss statement).
	www.toolkit.cch.com /text/P06_6550.asp (751 words)

	Invest FAQ:Analysis:Internal Rate of Return (IRR)
		This article discusses computing the internal rate of return on periodic payments, which might be regular payments into a portfolio or other savings program, or payments against a loan.
		Technically, IRR is a discount rate: the rate at which the present value of a series of investments is equal to the present value of the returns on those investments.
		The IRR that you compute is the rate of return per whatever time unit you are using.
	invest-faq.com /articles/analy-int-rate-return.html (1212 words)

	The Internal rate of Return
		Fortunately all is not lost as there is a very important and quite straightforward mathematical function called the Internal Rate of Return, or the IRR, which is basically like the true rate of interest but it can cope with varying interest rates and varying payments during the schedule as well as the occasional fee.
		Now, let’s guess what the interest rate would have to be if it was fixed, but where the monthly repayment schedule still stayed the same as in Figure 12, amortising the debt to zero after twelve months.
		The IRR is a single number that represents the whole payment schedule, regardless of variations caused by numerous actual interest rate changes.
	www.mortgagesexposed.com /Book_Contents/internal_rate_of_return.htm (938 words)

	ROI Guide: Internal Rate of Return - Computerworld
		IRR is the flip side of net present value (NPV) and is based on the same principles and the same math.
		IRR is often used as a hurdle rate, a sort of go/no-go investment threshold.
		IRR can also produce misleading results because, as classically defined, it assumes that the cash returned from an investment is reinvested at the same percentage rate, which may not be realistic.
	computerworld.com /managementtopics/roi/story/0,10801,78524,00.html (1383 words)

	Salmi - Luoma LTA 1/1981, IRR vs. ARR, J. Kay
		The problem of estimating the internal rate of return simultaneously with the growth rate of the firm from published financial statements has been tackled by Ruuhela (1972) and (1975).
		In estimation k is the growth rate of the firm (n in Kay's paper) and a is the accountant's rate of profit (where a has to be constant).
		Rauma-Repola is chosen for the emlpirical application because a previous estimate of the internal rate of reburn for the period under obser vation is available in Salmi (1980), where Ruuhela's method was used for the estimation.
	www.uwasa.fi /~ts/jkay/jkay.html (5367 words)

	NPV and IRR -- Measures for Evaluating Investments
		It is often assumed that higher is better for both of the net present value and the internal rate of return. In particular, it is usually stated that investments with higher internal rates of return are more profitable than investments with lower internal rates of return.
		However, this is not necessarily so. In some situations, an investment with a lower internal rate of return may be better, even judged on narrow financial grounds, than an investment with a higher internal rate of return.
		The right blue dot is where the curve crosses the discount rate axis, which is where the net present value is $0. The discount rate here, 0.054 (5.4%), is the internal rate of return.
	hadm.sph.sc.edu /COURSES/ECON/invest/invest.html (2627 words)

	Internal Rate of Return
		IRR and NPV are widely used to decide which investments should be undertaken, and which investments not to make.
		Internal Rate of Return is the flip side of Net Present Value and is based on the same principles and the same calculations.
		IRR is a true indication of a project's annual return of investment only when the project generates no interim cash flows - or when those interim investments can be invested at the actual IRR.
	www.12manage.com /methods_irr.html (407 words)

	Internal Rate of Return (Site not responding. Last check: 2007-10-08)
		The rate at which it does is commonly referred to as the "discount rate".
		The second had a projected IRR of 9.67% with a chance that it could be lower or higher depending on how the wind blows (couldn't resist the AE pun).
		Yousef Hashimi ______________________________ Reply Separator _________________________________ Subject: Internal Rate of Return Author: bioenergy at crest.org at NOTE Date: 9/4/96 4:41 AM This has nothing directly to do with energy, but I need help and there are a lot of well informed people in the bioenergy forum.
	solstice.crest.org /pipermail/bioenergy/1996-September/003102.html (744 words)

	EK 360 - CAPITAL INVESTMENT DECISIONS - INTERNAL RATE OF RETURN - WORKED EXAMPLE (Site not responding. Last check: 2007-10-08)
		The IRR represents that interest rate at which the NPV is zero, i.e.
		Thus, by using linear interpolation to estimate IRR, we have taken a short-cut across the curve, with the result that the estimate of IRR is slightly too high.
		Return to the Discussion of Internal Rate of Return
	www.herts.ac.uk /business/finman/ek360i.htm (579 words)

	[No title] (Site not responding. Last check: 2007-10-08)
		Internal rate of return depends only on the characteristics of the cash flows.
		Book rate of return Book rate of return (or average accounting return) is a measure of average accounting profit over the life of the investment divided by average book value of the investment.
		Book rate of return = average net income / average net investment (average net investment is average book value of assets over the life of the project) Accept an investment if its book rate of return exceeds a benchmark return.
	gladstone.uoregon.edu /~mhurley/FIN316/LectureNotes/8__Alternatives_to_NPV__w00_.doc (868 words)

	Fool.com: Tracking Your Success [Rule Maker] October 30, 2000
		IRR is the best way to track a portfolio because it fully takes into account the time value of money.
		Quite simply, IRR is a portfolio's annualized rate of return, taking into account both the amount of money invested and the length of time it has been invested.
		The reason for this is because the IRR calculation requires a process of trial and error ("interpolation"), by which the computer tries various rates of return until it narrows down to the one that matches all of the deposits and withdrawals with the current account value.
	fool.com /portfolios/rulemaker/2000/rulemaker001030.htm?source=EDSTRB (1288 words)

	Internal Rate of Return - IRR (Site not responding. Last check: 2007-10-08)
		Often used in capital budgeting, it's the interest rate that makes net present value of all cash flow equal zero.
		Essentially, this is the return that a company would earn if they expanded or invested in themselves, rather than investing that money abroad.
		IRR Analysis - A great tutorial by invest-faq.com on analysis using IRR.
	baystreet.investopedia.com /terms/i/irr.asp (55 words)

	Example of Internal Rate of Return (Site not responding. Last check: 2007-10-08)
		In order for this to be feasible the internal discount rate will have to be higher than the previous discount rate of 5%.
		This rate can be found by finding the internal discount rate where Net Present Value is equal to zero.
		Normally the Internal Rate of Return is simply found by trial and error.
	uwacadweb.uwyo.edu /WFCUCLASS/decision03/example_of_internal_rate_of_retu.htm (150 words)

	Internal Rate of Return as supplied by EagleTraders.com
		The rate of interest at which the present value of expected net cash flows from a project equals its initial cash outlays; a measure of the rate of profit per dollar of investment.
		In evaluating a proposed investment, the internal rate of return is computed to the minimum desired rate of return to determine whether a project should be accepted or rejected.
		If the internal rate of return is equal to or greater than the minimum desired rate of return, the project is desirable.
	www.eagletraders.com /advice/securities/internal_rate_of_return.htm (176 words)

	internal rate of return information (Site not responding. Last check: 2007-10-08)
		Internal Rate of Return - IRR Often used in capital budgeting, it's the interest rate that makes net present value of all cash flow equal zero.
		Internal Rate of Return Life Cycle Cost Net Present Value Opportunity Calculator Internal Rate of Return Calculator The internal rate of return (IRR) method of analyzing a major purchase or...
		internal rate of return (IRR) The average annual rate of return on an investment over a given number of years that makes the present value of future net cash flow equal the cost of the investment...
	www.griggsfinancial.info /articles/internal-rate-of-return.html (856 words)

	Rate of Return Question (Site not responding. Last check: 2007-10-08)
		The combination of a positive cashflow of $157,500 in year 2, together with an additional investment at the end of year 2 of -$180,000 results in a net cashflow at the end of year 2 of -$22,500.
		In calculating the raw IRR, the negative cashflow of -$22,500 is theoretically discounted back at the IRR to Present Value, which implies that this relatively small amount can be invested at the IRR (30.15%) to yield $22,500 in 2 years.
		The re-investment rate is never given, but the suggested re-investment rate is mentioned as the the investor's opportunity cost of funds.
	www.regentschoolpress.com /question2.htm (514 words)

	[No title]
		IRR is a way to analyze a major purchase or investment considering the time value of money.
		It basically calculates the interest rate which is the equivalent of the dollar amount your project will return.
		Once you know the rate, you can compare it to IRR rates on other projects, or compare to your organizations actual cost of borrowing money for you project.
	www.e-learningguru.com /tools/irr.xls (273 words)

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