What is the 'IRR Rule'
A measure for evaluating whether to proceed with a project or investment. The IRR rule states that if the internal rate of return (IRR) on a project or investment is greater than the minimum required rate of return – the cost of capital – then the decision would generally be to go ahead with it. Conversely, if the IRR on a project or investment is lower than the cost of capital, then the best course of action may be to reject it.
BREAKING DOWN 'IRR Rule'
The higher the IRR on a project and the greater the amount by which it exceeds the cost of capital, the higher the net cash flows to the investor. In general terms, a company that has to choose one, among several similar projects with equivalent degrees of risk, may go with the one that provides the highest IRR.
The IRR rule is one among a number of rules used to evaluate projects in capital budgeting. However, it may not always be rigidly enforced. For example, a company may prefer a project with a lower IRR over one with a higher IRR because the former provides other intangible benefits such as being part of a bigger strategic plan or impeding competition. A company may also prefer a larger project with a lower IRR to a much smaller project with a higher IRR, because of the higher cash flows generated by the larger project.

Internal Rate Of Return  IRR
A metric used in capital budgeting measuring the profitability ... 
IRR
The currency abbreviation or currency symbol for the Iranian ... 
The Net Internal Rate Of Return ...
A measure of a portfolio or fund's performance that is equal ... 
Modified Internal Rate Of Return ...
While the internal rate of return (IRR) assumes the cash flows ... 
Net Present Value  NPV
Net Present Value (NPV) is the difference between the present ... 
Initial Cash Flow
The amount of money paid out or received at the start of a project ...

Fundamental Analysis
Internal Rate Of Return: An Inside Look
Use this method to choose which project or investment is right for you. 
Fundamental Analysis
Calculating the Internal Rate of Return Using Excel
The internal rate of return on investments is explained and illustrated in different investment scenarios. 
Term
Internal Rate of Return Formula for Excel
The internal rate of return, or IRR, is a popular metric businesses use to measure a project’s return on investment. 
Investing Basics
Capital Budgeting: Capital Budgeting Decision Tools
Once projects have been identified, management then begins the financial process of determining whether or not the project should be pursued. The three common capital budgeting decision tools ... 
Personal Finance
An Introduction To Capital Budgeting
We look at three widely used valuation methods and figure out how companies justify spending. 
Investing Basics
Capital Budgeting: The Capital Budgeting Process At Work
This tutorial will conclude with some basic, yet illustrative examples of the capital budgeting process at work. Example 1: Payback PeriodAssume that two gas stations are for sale with the following ... 
Insurance
How to Compare Permanent Life Insurance Policies
How you can use the internal rate of return to compare and purchase a permanent life insurance policy. 
Investing Basics
Capital Budgeting: The Importance Of Capital Budgeting
Capital budgeting is a step by step process that businesses use to determine the merits of an investment project. The decision of whether to accept or deny an investment project as part of a ... 
Professionals
What Exactly Do Project Managers Do?
While supervision is one important part of the job, a lot more goes into project management than just watching everyone work. 
Professionals
Project Manager: Career Path & Qualifications
Learn more about what project managers job, the qualifications necessary for the position and the most common careers for these professionals.

What is the formula for calculating internal rate of return (IRR) in Excel?
Understand how to calculate the internal rate of return (IRR) using Excel and how this metric is used to determine anticipated ... Read Answer >> 
Which is a better measure for capital budgeting, IRR or NPV?
In capital budgeting, there are a number of different approaches that can be used to evaluate any given project, and each ... Read Answer >> 
What's the difference between weighted average cost of capital (WACC) and internal ...
Both weighted average cost of capital (WACC) and internal rate of return (IRR) are great measures for assessing value, but ... Read Answer >> 
What is the relationship between the hurdle rate (MARR) and the Internal Rate of ...
Find out how companies and managers use hurdle rate, or MARR, and internal rate of return, or IRR, to evaluate projects and ... Read Answer >> 
How do you use internal rate of return to calculate a capital budget?
Learn about how the internal rate of return is used in the creation of a capital budget along with net present value and ... Read Answer >> 
How much debt is too much when calculating capital budgeting?
Learn how companies determine how much debt is acceptable when funding a new project by using the net present value to estimate ... Read Answer >>