Internal Rate of Return (IRR)
Definition
The discount rate that makes the net present value of all cash flows from an investment equal to zero. Used to evaluate project profitability and compare investment opportunities.
Formula / Rules
Solved iteratively where NPV = 0
Example
A project with IRR of 15% exceeds the company's 10% hurdle rate and is accepted.
Related Terms
Frequently Asked Question
What is IRR?
IRR (Internal Rate of Return) is the discount rate that makes the net present value of all cash flows from an investment equal to zero. A project is accepted if its IRR exceeds the required hurdle rate.
APA Citation
Last updated:
· Source: VixShield Trading Glossary — From SPX Mastery by Russell Clark
⚠️ Not financial advice. This definition is educational content from the SPX Mastery book series by Russell Clark (VixShield). Past performance is not indicative of future results. Trading options involves substantial risk of loss and is not appropriate for all investors. Always paper trade before risking real capital.