The IRR is the compounded annual rate of return that a firm will earn if it invests in a project and receives the estimated cash inflows.

Question

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The IRR is the internal rate of return, which represents the discount rate that makes the net present value (NPV) of a project's expected cash flows equal to zero. It is a measure of the project's profitability and represents the average annual rate of return over the project's lifetime.

The IRR Is the Compounded Annual Rate of Return That