Who are you IRR? The IRR and Internal rate of return is the most accurate tool to evaluate…
Who are you IRR?
The IRR and Internal rate of return is the most accurate tool that evaluates our investment performance.
The internal rate of return (IRR) is a powerful calculation because it takes into account future cash flows - and due to the fact that money invested earlier is worth more.
You can think of it this way:
Would you prefer $ 10,000 today or in 5 years from now?
If you have the money now, you can invest those $ 10,000 and get a certain return on them for 5 years, so money today is worth a lot more than money in a few years.
Therefore, the IRR is in fact the "cumulative effective annual return" throughout the life of the investment or in other words, what is the average return when taking into account the incoming and outgoing cash flows in contrast to the ROI calculation which only takes into account the incoming cash flow only.
So when considering a return on investment, be a smart investor and do not just look at the return that comes from calculating the ROI alone.
#harelinvestments
#realestate
#realestateinvesting
The original responses to the post can be read at the bottom of the current post page on the site or in the link to a post on Facebook and of course you are invited to join the discussion
Responses