Internal Rate of Return

IRR is the annualized return rate at which the NPV of an initiative equals zero. It is compared against your org’s WACC as the hurdle rate. An IRR above WACC indicates value creation.

ValueMap uses XIRR, not standard IRR
Standard IRR assumes cash flows occur at regular annual intervals. Because ValueMap models cash flows month by month - and allows recognition at either the start or end of a month - it uses XIRR, which calculates the annualized return rate against exact dates rather than assumed periods.This produces a more accurate reflection of true financial performance, particularly for initiatives with irregular timing or multi-year horizons.

At the Org / Portfolio / Product level:

Metric	Notes
Above hurdle	Initiatives whose estimated IRR exceeds WACC. More is better.
Median	Middle estimated IRR across all initiatives. Less skewed by outliers than an average.
Range	Spread between lowest and highest estimated IRR. A wide range signals uneven performance.
Trend	Change in median estimated IRR compared to the previous month. Positive means returns are improving.

At the Initiative level:

Metric	Notes
Estimated	Original projected annualized IRR of the initiative.
Realized	XIRR from actual cash flows received.
Forecasted	IRR forecasted using actual cash flows plus remaining projections. Best estimate of final return but may be volatile before all actuals are logged.
Variance	Forecasted vs. estimated IRR as a percentage. Negative means tracking below the original projection.

IRR is sensitive to partial data and may appear unusually high or low early in an initiative. Values will stabilise as more actuals are logged.

NPV

Payback Period

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