What is the correct interpretation of IRR?
vacantpasserby
The internal rate of return (IRR) is usually defined as the rate that sets the net present value of a sequence of cash flows to zero, and it is often described as a “discount rate.” I would like to ask about IRR from a different angle: interpreting it as the yield earned by money while it is actually tied up in an investment. Under this interpretation, money earns a constant yield only while it remains committed; once distributions are paid out, that money leaves the investment and no longer ear