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Finance & Moneyadvanced

Internal Rate of Return

IRR

Definition

The yearly percentage return an investment is expected to earn, found as the rate at which its future cash exactly pays back what you put in.

Why it matters

IRR lets you compare very different investments on a single percentage, making it easier to choose where to put limited money.

Example

An investment with a 25% IRR is expected to grow your money faster than one with a 10% IRR, all else being equal.

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