Rate of Return (ROR)
The rate of return (ROR) or internal rate of return is a metric used to estimate the profitability of a project. The internal rate of return is the interest rate (or discount rate) at which the net present value of all the cash flows (both positive and negative) from a project or investment equal zero. The term “internal” refers to the fact that the internal rate excludes external factors, such as inflation, the cost of capital or various financial risks.
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