What is internal rate of return (IRR)?
Internal rate of return is the comparative investment rate at which your poultry farm’s net present value equals 0.
In other words,
The internal rate of return is the comparative rate of return which would produce a breakeven result (neither profit nor loss).
Understanding internal rate of return (IRR)
This investment breakeven point tells you at the precise comparative point at which your poultry farm idea becomes competitive.
It sets a benchmark above which you know it makes sense to look at the poultry business seriously.
Example
Also, take a look at this example poultry farm valuation.
Best practice
The internal rate of return is like a gatekeeper to the final gears of decision making surrounding your poultry farm proposal.
It doesn’t give a green light.
But much like an amber light tells you to prepare to:
- check your mirrors
- get into gear
- come off the hand break
- hold the clutch
- and initiate drive
Internal rate of return similarly indicates that you should take this proposal serious for moving forward.
It’s a really promising sign to be above the IRR (but not quite a green light).