What is IRR and NPV?

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IRR (Internal Rate of Return) is the rate at which the net present value of cash flows from an investment equals zero. NPV (Net Present Value) is the difference between the present value of cash inflows and outflows.

IRR is used to evaluate the profitability of an investment by calculating the rate of return that makes the net present value of all cash flows equal to zero.
NPV is a measure of the profitability of an investment by calculating the difference between the present value of cash inflows and outflows.
Both IRR and NPV are commonly used in capital budgeting to assess the potential profitability of investment projects.
A project with a positive NPV is considered financially viable, while an IRR higher than the cost of capital is also a good indicator of profitability.

What is IRR and NPV?

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