13 June 2009
IRR is a capital budgeting metric used by firms whether they should make investments.
IRR is the discount rate used in capital budgeting that makes the net present value of all cash flows for a particular project equal to zero.The higher the projects IRR,the more desirable to undertake the project.The higher the IRR means it is more that cost of capital deployed in that project.
For example Cost of Funds deployed in a project is 12% and IRR is 15% it is desirable to under take the project.
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