What does an IRR of -100% indicate about an investment?

An internal rate of return (IRR) is a metric used to evaluate the profitability of an investment. When the IRR is -100%, it signifies that the investment is expected to result in a total loss of the initial investment amount.

At -100% IRR, the mathematical implication is that the present value of the future cash flows is zero, meaning that the investment is generating no returns, and all the capital invested is lost. This scenario is particularly critical because it reflects a complete write-off of the investment, making it clear that the project or investment has failed entirely.

Thus, an IRR of -100% unequivocally indicates that the investor can expect to recover none of their initial capital, reinforcing that the investment in question is not viable.