Hey all,
Currently looking for the quick way to calculate IRR in your head / without a calc. Thanks!
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not sure there is quick way to do it in your head haha
Excel uses iteration to solve for the IRR of cash flows.. there isn't really a way to do it in your head.
For interview purposes, knowing the rule of 72 can be helpful when discussing IRR: http://en.wikipedia.org/wiki/Rule_of_72
This. Thank you
dychotomia
Assuming you need this for PE interviews, usually you'll just use a 5 year hold, which means that you can just memorize what a given multiple of invested capital corresponds to in terms of IRR.
^ agree with above.
assuming 5-year investment period, 2x CoC - ~15% 2.5x CoC- ~20% 3.0x CoC - ~25%
might be helpful to memorize the corresponding above on 3-year and 7-year basis just to keep in back pocket in case they ask.
You can also take the nth root (# of years) of the return multiple and then subtract 1. Prob can't do it in your head, but still a quick way to get there.
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