What is an Internal Rate of Return (IRR)?
IRR is the discount rate at which a project's NPV equals exactly zero — effectively the project's implied annual return. Compare it to the organization's hurdle rate (cost of capital): above the hurdle, invest; below, don't. Between projects, higher IRR is better.
For the exam, that's genuinely all you need: bigger IRR wins, and IRR is expressed as a percentage while NPV is money.
Formula
IRR = the r where NPV = 0
Worked example
A machine-shop expansion shows an IRR of 17% against the company's 11% cost of capital — the project earns 6 points above what the money costs, so it clears the bar. A competing idea at 9% IRR dies quietly, whatever its champions feel about it.