[Verse 1] When you're looking at investments, there's a rate you need to find It's the discount rate that makes your NPV decline To zero on the dot, that's the magic number here Internal Rate of Return makes the net present value disappear [Chorus] IRR, IRR, find the rate that makes NPV zero IRR, IRR, your investment's financial hero When it's higher than your cost, then you know you should invest IRR, IRR, put your project to the test [Verse 2] Take your cash flows through the years, both the outflows and the gains Set up your equation, let the mathematics explain Trial and error or a calculator's helping hand Find the rate that balances your future to present land [Chorus] IRR, IRR, find the rate that makes NPV zero IRR, IRR, your investment's financial hero When it's higher than your cost, then you know you should invest IRR, IRR, put your project to the test [Verse 3] Compare it to your hurdle rate, your minimum return If IRR is higher, then it's money you will earn Accept the project if it beats your required rate Reject it if it's lower, don't negotiate with fate [Bridge] But watch out for the pitfalls, IRR can sometimes lie Multiple rates of return when cash flows change their sign Reinvestment assumptions might not match reality Use it with NPV for better clarity [Chorus] IRR, IRR, find the rate that makes NPV zero IRR, IRR, your investment's financial hero When it's higher than your cost, then you know you should invest IRR, IRR, put your project to the test [Outro] Internal Rate of Return, a tool that's tried and true But always check the context for the best decision too IRR, IRR, guiding your investment way IRR, IRR, helping you decide today
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