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IRR NPV

by Dr. H. K. Rathod
(Gandhinagar,Gujarat,India)

If the Cost of Capital is 12% and the Internal Rate of Return is also 12%, what will the Net Present Value be?

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IRR NPV

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Jan 22, 2010
 IRR Definition
by: Dee Reavis

The definition of IRR can be made in terms of NPV. When the NPV = 0, the IRR of the project is equal to the discount rate used in calculating the NPV.

This is in fact the way that IRR is found. An iterative method is used with the discounted cash flow to change the discount rate by small amounts step by step until NPV = 0. When NPV = 0, then IRR = discount rate.

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