internal rate of return ( IRR)
A measure of yield that relates the cash flow from each interest payment and the cash flow from the investment's redemption value at maturity to the purchase price of the investment. It is a present value calculation that reflects the time value of each of those cash flows. By calculating the present value of the cash flows, the IRR reflects the reinvestment income that the investor can earn from reinvesting those cash flows, at the same yield as the investment that generated them, during the life of the investment. American Banker Glossary
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( IRR)
dollar-weighted rate of return. discount rate at which net present value ( NPV) investment is zero. The rate at which a bond's future cash flows, discounted back to today, equal its price. Bloomberg Financial Dictionary
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The discount rate at which an investment has a zero net present value. Exchange Handbook Glossary
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► See IRR.
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internal rate of return UK US noun [C or U] (ABBREVIATION IRR)
► ACCOUNTING, FINANCE the average amount of money earned each year from a particular investment, calculated by comparing how much money it makes each year with the original amount invested: »
Private equity aims to produce an internal rate of return of about 20% a year.
Financial and business terms. 2012.