Mathematics of Finance: Internal Rate of Return (IRR)

Merry Mariam Mathews

Abstract: This article abstract discusses the concept of the Internal Rate of Return in finance and provides a detailed explanation of how to calculate it, using practical examples and mathematical analysis. It highlights the importance of IRR in evaluating the profitability of investments and presents step- by-step instructions for determining the IRR. The article also includes two illustrative examples with calculations, demonstrating the application of IRR in real-world scenarios. In the first example, the IRR is calculated for a project with given cash flows, while the second example deals with a different investment scenario. The abstract concludes by emphasizing the importance of understanding IRR and its practical utility in financial decision- making.

Keywords: Internal rate of return, net present value, yield rate

How to Cite?: Merry Mariam Mathews, "Mathematics of Finance: Internal Rate of Return (IRR)", Volume 12 Issue 12, December 2023, International Journal of Science and Research (IJSR), Pages: 863-864, https://www.ijsr.net/getabstract.php?paperid=SR231209195431, DOI: https://dx.doi.org/10.21275/SR231209195431