IRR was first introduced by Joel Dean. In IRR, we try discounting at different discount rates until
we reach the rate at which the present value of cash inflows to present value of cash outflows
(investment). Thus, internal rate of return is the rate at which total present value of future cash
flows is equal to initial investment. In other words, it is the rate at which NPV is zero. This rate is
called the internal rate because it exclusively depends on the initial outlay and cash proceeds
associated with the project and not by any other rate outside the investment.
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