The IRR measures profit. It therefore measures return "on" investment and not capital recovery. However, any investment that returns more than it cost will be a profitable investment and will have an IRR that is both positive and measureable. Lets consider the following example. Suppose that you purchase an appartment complex at the beginning of Year 1 (or the end of Year 0) for $100,000. You expect to earn $15,000 per year for the next 4 years at the end of each year, but at the end of the year 5 years from now you expect cash flows to equal $40,000. Here is what these cash flows look like in a table: Compute the IRR and report it as a percent . For example, if the correct answer is 6.5% simply enter -6.5 in the numerical answer box