IRR stands for Internal Rate of Return. It is an investment performance measure used in commercial real estate to measure the potential or profitability of a particular real estate investment. IRR is expressed in percentage rate earned on each shilling or dollar invested for each period in a particular Investment venture. IRR is also a discount rate that makes the net present value (NPV) of all cash flows from a particular project equals to zero. The use of IRR as a performance measure in Real Estate Investment is to give an investor the means to compare alternative investments. Generally speaking, the higher a project IRR, the more desirable it is to invest in.
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