1, the internal rate of return is also called "internal rate of return". Discount rate when the net present value of investment projects is zero. That is, the discount rate when the investment is at the economic break-even point. It is an important substitute for the net present value method. It can be regarded as the average return that investors can get during the duration of the project. As an index for evaluating investment projects, it has the advantage of intuition, but the disadvantage is that it cannot be used to evaluate unconventional investment projects and projects of different scales.

2. Considering the time value is to make the present value of cash flow generated by an investment in the future exactly equal to the rate of return of investment cost, rather than the idea that "it doesn't matter whether the net present value is zero or not, whether it is high or low". Because the premise of calculating the internal rate of return is to make the net present value equal to zero. To put it bluntly, the higher the internal rate of return, it means that the cost you invest is relatively small, but the income you get is relatively large. For example, the cost of two investments, A and B, is 654.38+ 10,000 yuan, and the operating period is 5 years. A can get a net cash flow of 30,000 yuan a year, and B can get 40,000 yuan a year. Through calculation, it can be concluded that the internal rate of return of A is about 15% and that of B is about 28%, which can actually be seen from the present value coefficient table of annuity.

3. The advantage of 3.IRR method is that it can link the income of the project with its total investment, and point out the return rate of this project, so as to compare it with the industry benchmark investment return rate and determine whether this project is worth building. When the loan is used for construction, when the loan conditions (mainly interest rate) are not clear, the internal rate of return method can avoid the loan conditions and get the internal rate of return as the acceptable upper limit of the loan interest rate first. However, IRR is a ratio, not an absolute value. The scheme with low internal rate of return may be worth building because of its large scale and larger net present value. Therefore, the internal rate of return and net present value must be considered together when choosing the proportion of each scheme.