It is true that if IRR of the machine c is 12.5% and IRR of the machine d is 11%, then it is correct to conclude that machine c is more profitable than machine d.
The formula known as IRR is used to calculate the rate of return on an investment. The term "internal" refers to the absence of external factors from the computation, such as the risk-free rate, inflation, the cost of capital, or financial risk. The procedure can be applied ex-ante as well as ex-post. IRR is an ex-ante forecast of future annual rate of return. When employed ex post, it calculates the actual investment return that was made on a past investment after the fact. Yield rate and discounted cash flow rate of return are some other names for it (DCFROR). The "annualized effective compounded return rate," or rate of return that sets the net present value of all cash flows from the investment at zero, is what is meant by the term "internal rate of return" when referring to a project or investment.
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