For an investment project, when the discount rate is 10%, the net present value is 500 yuan, and when the discount rate is 15%, the net present value is -480 yuan, so within the project,

Then the internal rate of return of the project is 12.55%. Internal rate of return (the total present value of capital inflow is equal to the total present value of capital flow, and the net present value is equal to the discount rate of zero. If you don't use a computer, you must use several discount rates to calculate the internal rate of return until you find a discount rate with a net present value equal to or close to zero. Internal rate of return is the rate of return pursued by investment, which is the discount rate that makes the net present value of investment projects equal to zero. This is the ideal return on investment. The bigger the index, the better. Generally speaking, the project is feasible when the internal rate of return is greater than or equal to the benchmark rate of return.

1. The sum of the discounted values of the annual cash flow of the investment project is the net present value of the project. When the net present value is zero, the discount rate is the internal rate of return of the project. In the economic evaluation of a project, according to different levels of analysis, the internal rate of return can be divided into financial internal rate of return (FIRR) and economic internal rate of return (EIRR). At present, investment methods such as stocks, funds, gold, real estate and futures have been familiar and used by many financial managers. However, many people's understanding of the investment effect is limited to the absolute amount of income, lacking scientific judgment basis. For them, the internal rate of return (IRR) index is an indispensable tool. Internal rate of return (IRR) is a macro-conceptual indicator, which is usually understood as the ability of project investment income to resist currency depreciation and inflation. For example, the internal rate of return is 10%, which means that the project can withstand the maximum currency depreciation 10% or annual inflation 10% during the project operation.

2. At the same time, the internal rate of return also reflects the ability to resist risks in the process of project operation. For example, the internal rate of return is 10%, which means that the maximum risk undertaken by the project every year is 10%. In addition, if the project needs loans, IRR can represent the highest acceptable interest rate. If the loan interest is included in the project economic accounting, it represents the maximum floating value of the loan interest in the future project operation. For example, if the internal rate of return is based on 8%, the inflation assumption is around 8%. If it is equal to 8%, it means that after the project is completed, there is no money except the "salary" you get, but it is still feasible. If it is less than 8%, it means that the project will lose a lot when it is completed.

Because of inflation, the money you earn in the future may not be enough for the cost of your investment. Projects with long return on investment are particularly important for internal rate of return. For example, the general investment payback period of hotel construction is about 10- 15 years, and the investment operation period of large-scale tourism development is about 50 years. This is the most popular and practical meaning of internal rate of return. On the basis of calculating the net present value, if the net present value is positive, a higher discount rate should be used to calculate the net present value until the calculated net present value is close to zero. Continue to increase the discount rate until the NPV calculation is negative. If the negative value is too large, reduce the discount rate, and then measure a negative value close to zero. According to the discount rate of adjacent positive and negative net present value close to zero, the internal rate of return is obtained by linear interpolation.