Internal rate of return (IRR) and net present value (NPV) aren’t always equally effective. Compare NPV vs. IRR to learn which to use for capital budgeting.

Net present value and internal rate of return are used to determine the potential of a new investment project. Here's how to calculate the NPV and IRR.

Internal rate of return (IRR) is one of several well-known formulas used to evaluate prospective investments, especially ones that generate cash flows, like in real estate.

Alyssa Powell/Insider Equalizing inflows and outflows When calculating IRR, you're solving for an NPV of zero. You'll then need the number of years you plan to hold the investment (N), as well as ...

IRR is a discount rate, for which NPV is equal to 0. However, since IRR function is not linear, it is possible to calculate more IRRs for one stream of CFs, so called unconventional cash flows.