02 / 15 · GLOSSARY
02 / 15IRRDificultad

Internal Rate of Return

The actual return rate your business generates. If it exceeds your MARR (minimum required rate), the project is viable.

↳ Analogía

It's the interest rate your investment is paying you. If your bank gives 10% and your business gives 35%, the decision is clear.

Ejemplo numérico

IRR > MARR: the project earns more than your minimum threshold — accept. IRR < MARR: it earns less than the safe alternative — reject. With the same flows from the NPV example, IRR ≈ 15.2%. If your MARR was 15%, the project barely passes — sensitive to any forecast error.

Fórmula
IRR = rate that makes NPV = 0
↳ Ver tambiénNPVMARRPayback
IRR vs. NPV: which one to use to evaluate your project→

When to use it

When you want to express profitability as a rate comparable with other alternatives: term deposits, bonds, another business.

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Definitions aligned with Blank & Tarquin, Engineering Economy, 8th edition — McGraw-Hill.