#### Definition:

The rate of return utilized to estimate the profit earned from the investments is the Internal Rate of Return [IRR] or Economic Rate of Return [ERR]. Net present value of the transferred amount is converted to zero by the 'rate of return' that is, IRR on any investment.

#### Example:

Total amount invested is Rs 70000. Net income earned for first year is Rs 12000. Net income received for second year is Rs 15000. Net income earned for third year is Rs 18000. Net income received for fourth year is Rs 21000. Net income for the fifth year is Rs 26000. Find out IRR from the given values?.

##### Given,

Invested Amount = 70000
Net Income derived
1st yr - 12000
2nd yr - 15000
3rd yr - 18000
4th yr - 21000
5th yr - 26000

##### To Find,

Internal Rate of Return

##### Solution:

IRR = 8.66 %