Internal Rate of ReturnIRR
Quick answer
Internal rate of return (IRR) is the annualized discount rate at which a project's cash flows have a net present value of zero.
IRR expresses return as a time-weighted annual percentage, which makes it sensitive to when cash is received as well as how much. It is the primary return metric in joint-venture equity waterfalls and promote hurdles. Because IRR rewards early distributions, it is usually presented alongside equity multiple, which is time-insensitive.
Related product: JV Equity
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