How the numbers work
Internal rate of return (IRR)
The yearly return the project earns on the money you put in.
IRR is the discount rate at which the project's NPV is exactly zero. Put simply, it's the yearly return your investment earns over the projection.
Reading it
Compare IRR with your discount rate:
- IRR above the discount rate: the project beats the return you asked for. NPV is positive.
- IRR below it: the project falls short. NPV is negative.
Foundation finds IRR by trying rates until NPV reaches zero. If cash flow never turns positive, no rate makes NPV zero, and the dashboard shows IRR as not available.
IRR is easy to compare across projects, but it doesn't show size: 40% on a small café and 40% on a factory are very different amounts of money. Read it together with NPV.