what is the difference between IRR and interst rate
Internal rate of return(IRR) is the discounted rate at which the present(future values discounted at certain rate r) value of all cash outflows(over life of a project)becomes equal to the present value of all cash inflows.
Present value of a cash flow=Amount projected/(1+ r)^t
where r=IRR,t=number of years from project start.
Interest rate is cost of capital i.e.rate at which capital(debt)becomes available from market like 10% or 15%.
For a project worth starting,IRR should be greater than the interest rate at which capital investment into the project is done.
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