Captain's Log Entry 6934.3—Most business professionals outside of finance  admit they do not really understand the meaning or use of internal rate of return (IRR). However, many of the same finance people who require IRRs with incoming proposals are themselves unable to explain in practical terms.
IRR is an investment metric
Nevertheless, many are required  by their CFOs or other financial specialists to deliver internal rate of return IRR figures to support funding requests, business case results, or proposals for projects, acquisitions, or other actions.It is surprising, however, that many of the same finance people who require IRRs with incoming proposals are themselves unable to explain in practical terms:
  • The meaning of IRR % values.
  • How IRR compares to other financial metrics such as NPV or ROI.

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