Internal Rate of Return

Rune
Rune Registered Posts: 91 ? ? ?
:huh: Help!!

I know that's to do with the npv being calculated to zero using the irr, But how do I explain it in english?

Comments

  • peugeot
    peugeot Registered Posts: 624
    The way to view this is to say that the internal rate of return is the discount rate that when applied to the cash inflows of the asset the total of these discounted inflows equals the cash outflows i.e. it is the rate of return that produces a zero net present value.

    Kind regards
    Steve
  • Rune
    Rune Registered Posts: 91 ? ? ?
    Thanks Steve

    Much appreciated, now all I have to do is to get my head around the FRA exam style, the skills test was much easier!

    Kind regards
    Stella
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