In relation to private equity (PE) and venture capital (VC) funds, it is the discount rate that makes the net present value of all the cash flows available from the inception to the end of the investment, equal to zero. In this type of internal rate of return (IRR), there is no terminal appraised value or residual value (as opposed to interim internal rate of return).

This measure of internal rate of return takes into consideration all the cash flows, realized or anticipated, generated over the investment’s entire life.

The lifetime internal rate of return is also known as the overall internal rate of return.