what is the difference between project IRR and equity IRR?

Answer 1

Project IRR is based on the returns to all of the parties that financed the project -- generally the equity and the debt holders. The IRR calculation will look at those cash flows available to pay both interest and dividends.

Equity IRR represents the returns to just the equity holders, and looks at cash flows after interest hsa already been paid.

Answer 2

The project IRR takes as its inflows the full amount(s) of money that are needed in the project. The outflows are the cash generated by the project. The IRR is the internal rate of return of these cash flows. The calculation assumes that no debt is used for the project. Equity IRR assumes that you use debt for the project, so the inflows are the cash flows required minus any debt that was raised for the project. The outflows are cash flows from the project minus any interest and debt repayments. Hence, equity IRR is essentially the "leveraged" version of project IRR.