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Monday, June 6, 2011

Advantages and Disadvantages of IRR

Internal Rate of Return (IRR) is the discount rate that makes the net present value of all cash flows from an investment project equal to zero.

Advantages of Internal Rate of Return:

1) This technique gives equal importance to all the cash flows. We just need to identify the point at which the present value of cash inflow is equal to present value of cash outflow.

2) It is a good method of

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