A firms profit is = revenue - labor costs - capital costs. Its capital cost can
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A firm’s profit is π = revenue - labor costs - capital costs. Its capital cost can be stated as its internal rate of return on capital, irr, times the value of its capital, pKK, where pK is the price of a unit of capital and K is the number of units of capital. What is the firm’s implicit rate of return on its capital?
Internal Rate of ReturnInternal Rate of Return of IRR is a capital budgeting tool that is used to assess the viability of an investment opportunity. IRR is the true rate of return that a project is capable of generating. It is a metric that tells you about the investment...
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