Companies appraise investments by comparing the benefits against the costs, and discounting these cash flows with reference to time. The IRR is the discount rate (Minimum return (pa%)) that when applied to the cash outflows and inflows delivers a project Net Present Value of zero. This is therefore the actual %age return per annum on the funds used for the investment.[ROI Whitepapers](http://www.sharkfinesse.com/whitepapers/#all)
Take all the cash outflows, and all the cash inflows for an investment. What rate of return per annum is derived by accepting the project? Answer = the IRR %age. A high IRR shows a very profitable project whereas a low IRR delivers lower %age returns. Comparing this result against the minimum percentage needed for the customer decision makers will be the determining factor in whether to invest/buy or not.[ROI Whitepapers](http://www.sharkfinesse.com/whitepapers/#all)
