Question

Difference between internal and external rate of return

Answer 1

Internal rate of return (IRR) is a metric used in capital budgeting to estimate the profitability of potential investments. Internal rate of return is a discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero. IRR calculations rely on the same formula as NPV does.

Answer 2

Internal rate of return(IRR) is metric used in capital budgeting to estimate the probability of potential investments.
External rate of return method. EER method directly takes into account the interest rate external to a project at which a net cash flows generated or required by the project over its life can be reinvested or borrowed..