What is the discount rate in the irr method and in the npv method
The Internal Rate of Return (IRR) is the discount rate that makes the net present value (NPV) of a project zero. In other words, it is the expected compound annual rate of return that will be earned on a project or investment. In the example below, an initial investment of $50 has a 22% IRR. Internal Rate of Return is the discount rate at which NPV = 0. The calculation of NPV is made in absolute terms as compared to IRR which is computed in percentage terms. The purpose of calculation of NPV is to determine the surplus from the project, whereas IRR represents the state of no profit no loss. The IRR is the discount rate at which the net present value (NPV) of future cash flows from an investment is equal to zero. Functionally, the IRR is used by investors and businesses to find out if