The internal rate of return is an investment calculation to more accurately project how much money you will earn. It is typically used in venture capital projects to ensure that the money you invest upfront earns more over the longer term than simply putting the money into the bank. To work this out, it takes into account factors such as the depreciation of your asset, irregular payments and the fact that your income starts off small and increases over time. Because there is no capital repayment, we make use of IRR to take into account the replacement of the original purchase price.
Put simply, the internal rate of return is your projected income minus the original purchase price of your asset. You can watch this video explaining IRR in more detail.
At Fedgroup, we believe in transparency and would like to ensure our investors understand how we have calculated the return.