Internal rate of return

Imagine you have some money that you want to invest, but you don't know which investment will give you the most profit. The Internal Rate of Return or IRR is a way of measuring how good an investment is.

Think of it like a growth chart that tells you if you're growing taller or not. But instead of measuring your height, it measures how much money you're making from your investments.

The IRR is a way of calculating what percentage of return you get on your investment each year. It's like asking how many apples you can get back for every apple you invest.

For example, if you invest $100 in Year 1 and get $110 back in Year 2, your IRR is 10%. This means that for every $1 you invested, you earned 10 cents every year.

The IRR considers how much money you invest in the beginning, how much money you get back each year, and how long you keep your investment. It helps you compare different investments and choose the one that will give you the best return.

So, if you want to be a smart investor, you need to learn how to use the Internal Rate of Return to find the best investment opportunities.