Internal Rate of Return:
Rather than selecting a particular discount rate for the present value analysis, various rates can be tried until the discounted present value of the stream of benefits are exactly offset by the discounted stream of costs.  Hence, a given project is economically worthwhile if its internal rate of return exceeds the cost of borrowing funds. Comparing alternative projects, the one with the highest internal rate of return is the best alternative.  Internal rate of return is indifferent to the size of the alternatives or the placement of negative effects, but it tends to be more abstract than either net present value or B/C ratio.
       n                             n
set  · Bt/(1+r)t    =  ·  Ct/(1+r)t  and solve for ÒrÓ
          t=1                     t=1               to find internal
    rate of return