The Internal Rate of Return (IRR) is a measure of the compound rate of return on an investment or project. This rate of return depends solely on the internal circumstances of the business or asset and does not include any exogenous factors. The IRR is considered as a discount rate at which the present value of the future cash flows of the investment equals the cost of the investment. Investors use IRR to support investment decisions in projects by comparing it with the cost of capital. If the IRR is greater than or equal to the cost of capital, the investor may accept the project as a good investment. However, if the IRR is lower than the cost of capital it implies the returns will be lower than the cost of capital used to finance the project so the investment may be rejected.