The Internal Rate of Return (IRR) is the discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero.

IRR is used to evaluate the attractiveness of a project or investment. Generally, if the IRR is greater than the cost of capital, the project is considered acceptable.

Key points about IRR:

• Higher IRR indicates a more desirable investment
• Doesn’t consider the absolute size of the investment
• Assumes cash flows are reinvested at the IRR rate
• Can have multiple solutions for non-conventional cash flows