What Is IRR or the Internal Rate of Return?

If the IRR of your project or business venture is lower than your cost of debt or the amount of interest rate you would pay to a bank (if you borrow money from the bank to do the investment or project), then it is not a good investment. On the other hand, if your IRR is higher than the amount you would borrow from the bank to pay for an investment or project, then it is a good investment, because of the positive "spread" in between your rate of return and cost of debt.

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