INTERNAL RATE OF RETURN (IRR) 

The discount rate at which the present worth of future cash flows is exactly equal to the initial capital investment. In capital budgeting, it is called the HURDLE RATE. The advantage of using internal rate of return as a measurement of an investment's worth is that all types of investments can be analyzed or compared on an equivalent basis and in an objective manner. The results, however, are no better than the projections made by the preparer since risk factors and assumptions may outweigh the mathematical calculation.


