ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -A suitable investment should have an internal rate of return equal to or greater than its required rate of return. Investors who limit themselves to risk free and low risk investments can avoid purchasing power risk.

Detailed explanation-2: -Key Takeaways The internal rate of return (IRR) rule states that a project or investment should be pursued if its IRR is greater than the minimum required rate of return, also known as the hurdle rate. The IRR Rule helps companies decide whether or not to proceed with a project.

Detailed explanation-3: -The IRR rule states that if the IRR on a project or investment is greater than the minimum RRR-typically the cost of capital, then the project or investment can be pursued. 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.

Detailed explanation-4: -What is the difference between IRR, WACC and RRR? IRR is the internal rate of return. RRR is the required rate of return. The IRR is simply the discount rate, which, when applied to a series of cashflows, gives a net present value (NPV) of zero.

Detailed explanation-5: -In general, an IRR of 18% or 20% is considered very good in real estate, however, a lower number stretched out over a longer period of time can be more beneficial for building wealth. ROI is a more commonly used metric that measures the overall return on an investment, whereas IRR measures annual returns.