Internal Rate of Return (IRR) is the discount rate when the total present value of capital inflows is equal to the total present value of capital outflows and the net present value is equal to zero.

If a computer is not used, the internal rate of return needs to be calculated using several discount rates.

Until you find the discount rate at which the net present value is zero or close to zero.

The internal rate of return is the rate of return that an investment aspires to achieve, and it is the discount rate that can make the net present value of the investment project equal to zero.

It is the rate of return an investment aspires to achieve, and the bigger the indicator, the better.

Generally speaking, the project is feasible when the internal rate of return is greater than or equal to the benchmark rate of return.

The sum of the discounted present values ??of the cash flows of an investment project in each year is the net present value of the project.

The discount rate at which the net present value is zero is the project's internal rate of return.

In project economic evaluation, depending on the level of analysis, the internal rate of return can be divided into financial internal rate of return (FIRR) and economic internal rate of return (EIRR).

Extended information: In the formula: FIRR - financial internal rate of return; CI - cash inflow CO - cash outflow - net cash flow in period ?t? n - project calculation period when the construction project is invested once at the beginning of the period

, when the net cash flows of the project are equal in each year, the calculation process of the financial internal rate of return is as follows: 1) Calculate the annuity present value coefficient (p/A, FIRR, n) = K/R; 2) Check the annuity present value coefficient table and find

The two coefficients (p/A, i1, n) and (p/A, i2, n) adjacent to the above-mentioned annuity present value coefficient and the corresponding i1, i2 satisfy (p/A, il, n) >K

/R>(p/A, i2, n); 3) Use interpolation method (interpolation method) to calculate FIRR: (FIRR-I)/(i1-i2) = [K/R-(p/A, i1,

n) ]/[(p/A, i2, n)—(p/A, il, n)] If the cash flow of the construction project is a general conventional cash flow, the calculation process of the financial internal rate of return is: 1) First, according to

Empirically determine an initial discount rate ic.

2) Calculate the financial net present value FNpV(i0) based on the cash flow of the investment plan.

3) If FNpV(io)=0, then FIRR=io; if FNpV(io)>0, continue to increase io; if FNpV(io)<0, continue to decrease io.

4) Repeat step 3) until you find two discount rates i1 and i2 that satisfy FNpV(i1) >0 and FNpV (i2)<0, where i2-il generally does not exceed 2%-5%.

5) Use linear interpolation formula to approximately calculate the financial internal rate of return FIRR.