Equity multiple and the true IRR for a simple hold, with the common shortcut shown beside it so you can see why timing matters. Updates as you type.
Total distributions—
Equity multiple—
IRR (true)—
CAGR of the multiple—
IRR solves NPV = 0 over the dated cash flows. The CAGR of the multiple ignores when cash arrives.
Why the two differ: the equity multiple’s CAGR treats the deal as one lump at the end. The IRR credits every interim distribution the year it lands, so with cash flow along the way the IRR is higher. Reporting the CAGR as the IRR is one of the most common modeling errors, this tool keeps them separate on purpose.
Educational tool only. Not financial, investment, tax, or legal advice. Assumes level annual cash flow and a single terminal sale; real deals have uneven cash flow.
Want returns done right, every time? CRE Accounting & Financial Reporting covers cash-on-cash, equity multiple, and IRR.