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IRR uses the projected cash inflow and outflow to estimate the profit that you may gain on the said investment, it can be used as a benchmark of the return you would accept for that investment
IRR basically tells you the minimum return you require from a certain project in order to breakeven. So, if your actual return exceeds IRR you are making a profit.
Internal Rate of Return or IRR simply tells you maximum level of cost of funds you can afford for project before project cost surpases return on investment. i.e. IRR is breakeven level where undertaking a project is neither profitable nor a loss making one. So wider the gap between IRR and cost of funds the more profitable the project would be. On other hand a peoject would not be undertaken if cost of funds is greater than IRR.
