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Glossary - Internal Rate of Return (IRR)
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Learning: Knowledge
Also known as “economic rate of return” (ERR), internal rate of return (IRR) is used to measure and compare the quality, in terms of profit, of potential investments. Better investments will have higher internal rates of return. The formula for calculating IRR is the same as that of NPV, but IRR reflects an investment’s quality, while NPV shows the value of the investment.