Mathematics Quote by Mark Jeffery
““IRR is technically calculated by setting the NPV equation to zero and solving for r = IRR.””
About This Quote
Source Finance Textbook: Investment Analysis, 2020
IRR is found by setting the net present value to zero and solving for the discount rate.
In simple terms: IRR equals the rate that makes NPV zero.
Use IRR to assess project profitability.
Themes
Mood
Type
When to use this quote
- capital budgeting
- project appraisal
- financial modeling
- risk assessment
Key Concepts
Questions to Reflect On
- When is IRR misleading?
- How does cash‑flow timing affect IRR?