The IRR measure is an annual percentage return that is calculated by comparing the benefits from a spend decision against the costs and expressing this result as an annual compounded % rate. A similar everyday example is the annual rate of return on a loan, or a quoted interest rate on a credit card - but in reality, the calculation of IRR is not at all straightforward.
See Also
How to Measure the Success of Your InvestmentsWhat a Good IRR Looks Like in Real Estate Investing - Break Into CREA better way to understand internal rate of returnThe Advantages and Disadvantages of the Internal Rate of Return MethodA CFO will need to know the IRR answer and will be able to quickly identify the correct IRR calculation, so it is important to calculate it correctly.
In this paper we examine two of the common pitfalls with IRR and discuss the technique used in Shark which avoids these errors.
