INTERNAL RATE OF RETURN Definition

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INTERNAL RATE OF RETURN (IRR) is the discount rate that makes the project have a zero Net Present Value (NPV). IRR is an alternative method of evaluating investments without estimating the discount rate. IRR takes into account the time value of money by considering the cash flows over the lifetime of a project. The IRR and NPV concepts are related but they are not equivalent.

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RELATIVE CHANGE is a value that is properly related in size or degree or other measurable characteristics, e.g. cost of goods enjoyed a relative change of 9% as compared to prior period performance.

COMMON-SIZE STATEMENT see COMMON SIZE ANALYSIS.

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