IRR Internal Rate of Return

http://JoanWilson.PrudentialCal.com IRR Internal Rate of Return
The true annual rate of earnings on an investment. Equates the value of cash returns with cash invested. Considers the application of compound interest FACTORS. Requires a trial-and-error method for solution.
Example: Able sells for $20,000 land that he bought 4 years earlier for $10,000. There were no CARRYING CHARGES or TRANSACTION COSTS. The IRR was about 19%. That is the annual rate which compound interest must be paid for $10,000 to become $20,000 in 4 years.
Example: Baker received $3,000 per year for 5 years on a $10,000 investment. The IRR was about 15%.
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Joan Wilson (Realtor) California Cool 4 Sale Prudential California Realty Direct: 760-757-3468 - 800-975-7481 x 111 JoanWilson@prusd.com
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[wilsonrealtor]

@TESTICKL3R NPV(Net Present Value) calculations require you to provide an interest rate. IRR(Internal Rate Of Return) calculators tell you what the interest rate is, based on actual cash flows. Many people find that the IRR is more intuitive. The actual IRR formula is "If NPV = 0 then IRR = Discount Rate" or stated in words; when the NPV is equal to zero, then the IRR is equal to the discount rate." Knowing what it is, is kind of like knowing the interest rate on your savings account.

[TESTICKL3R]

is there a formula?