Dear Forum members,
Theoretically i know about IRR. It is the discount rate that generates a zero net present value for a series of future cash flows. I also read that IRR for an investment is the percentage rate earned on each Re invested for each period it is invested. If, at IRR NPV is 0, does that mean at IRR, there is no profit no loss?
Also, suppose the IRR for a project is 10% (for 3 years). Does it mean that the company will have a return of 10% so suppose it wishes to borrow from a financial institution the rate of interest payable should be less than 10% for the venture to be profitable? And whether it means that 10% return will be earned by the company over a period of 3 years or in each of the 3 years individually?
Request you to reply asap
Thanking You.
CAclubindia
