CAGR and IRR
Preemptive disclosure: I searched this already and couldn't find anything.
When would the calculations of IRR and CAGR be the same. More specifically, if you had to find the IRR via mental math, when could you just use the formula for CAGR?
For example: If an investment cost 135mm upfront, and the value is 625mm in 5 years, then the IRR is 35.9%, which is the same as (625/135)^(1/5).
I guess this would only work if you did not have to make payments in the interim and assumed the increase in value was constant?
IRR is for project profitabilities whereas CAGR is more for stuff that grows... which can be the same depending the case... but for instance if you want to know the rate at which users or revenues grow on 5 years, use cagr, whilst if you've got a project with inflows and outflows you can't talk about cagr and you would be doing an irr... but in your particular case, both are the same...
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