BACK TO GLOSSARY

Internal Rate of Return (IRR)




The internal rate of return (IRR) is a metric used in financial analysis to estimate the profitability of potential investments. IRR is a discounted rate that makes the net present value (NPV) of all cash flows equal to zero in a discounted cash flow analysis.

IRR is ideal for analyzing capital budgeting projects to understand and compare potential annual return rates over time. To calculate the IRR, first, you need to equal the net present value to 0:

0 = NPV = Σ Ct/(1+IRR)^t − C0

where: Ct =Net cash inflow during the period.

C0 = Total initial investment costs.

IRR = The internal rate of return.

t = The number of periods.

As complicated as this formula seems, you can also calculate the IRR using OpenOffice Calc or Microsoft Excel. All you need to do is combine your cash flows, including the initial outlay and subsequent inflows and apply the IRR function.

LogoW

SeedBlink Crowd SA (registration number PJR28FSFPR/400001 from 3rd of November, 2022) is authorised and supervised by the Romanian Financial Supervisory Authority (ASF).

Investing in start-ups involves risks, including loss of capital, illiquidity, dilution, lack of dividends. It is suitable only for investors capable of evaluating and bearing those risks. In any event, it should be done only as part of a diversified portfolio (meaning a portfolio in which investment in start-ups represents only a fraction of the total investments or assets). Before investing please read the risk warnings available at https://seedblink.com/generalterms as well as the risks related provisions of the investment facilitation agreement that will be provided to you for the relevant round. SeedBlink is not responsible for any information provided by the start-ups, even if distributed through or by SeedBlink. SeedBlink does not endorse any start-up for investment nor does it advise you on the merits of your investment. Seedblink does not provide to you any other advisory services. The decision to invest is yours only. If you require help in evaluating a decision to invest, you should consult a professional adviser. The messages and documentation you receive from SeedBlink or the start-ups have been neither verified nor approved by the Romanian or the European authorities. Nothing in this message shall be considered an offer to sell, or a solicitation of an offer to buy, any security to any person in any jurisdiction to whom or in which such offer, solicitation or sale is unlawful.