Rex says
Money math without the spreadsheet headache. Plug in your numbers and I'll show you exactly where the dollars land.
Try a scenario
Click to load — tweak from there.Inputs
Result
Approximate annualized IRR
18.2%
Equity multiple
1.95
Total profit
$95,000
Average annual profit
$23,750
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How to use this
- 1Enter initial investment ($).
- 2Enter total cash returned (all distributions + sale) ($).
- 3Enter hold period (years).
- 4Read your approximate annualized irr on the right — it updates as you type.
- 5Hit Share to keep the scenario or send it to someone.
About this calculator
Equity multiple and IRR answer different questions and investors regularly confuse them. Equity multiple is simply total cash returned divided by cash invested — a 2.0x multiple means you got double your money back, full stop, with no regard for timing. IRR (internal rate of return) accounts for when you got the money, annualizing the return so a 2.0x over three years shows a much higher IRR than a 2.0x over ten years. This calculator takes your initial investment, total cash returned (including all distributions and the final sale proceeds), and the hold period, computing both metrics side by side. A deal with a lower equity multiple but shorter hold can beat a higher-multiple, longer-hold deal on IRR, which matters if you plan to recycle capital into new deals. Sponsors sometimes lead with whichever metric flatters the deal more, so always ask for both, and for IRR, ask whether it's calculated on actual periodic cash flows (correct) or just the two endpoints (an approximation, like this simplified calculator).
Worked example
Using the values the calculator loads with:
Inputs
- Initial investment: 100000 $
- Total cash returned (all distributions + sale): 195000 $
- Hold period: 4 years
Results
- Approximate annualized IRR: 18.2%
- Equity multiple: 1.95
- Total profit: $95,000
- Average annual profit: $23,750
What each field means
Inputs
- Initial investment ($)
- The initial investment used in the calculation, measured in $. Starts at 100000 $ so you have a working example on load.
- Total cash returned (all distributions + sale) ($)
- The total cash returned (all distributions + sale) used in the calculation, measured in $. Starts at 195000 $ so you have a working example on load.
- Hold period (years)
- The hold period used in the calculation, measured in years. Starts at 4 years so you have a working example on load. Accepted range: 0.25–20 years.
Results
- Approximate annualized IRR
- Returned as a percentage and shown as the headline result. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Equity multiple
- Returned as a decimal number. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Total profit
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Average annual profit
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
FAQ
Why isn't this an exact IRR?
True IRR solves for the discount rate that zeroes out the net present value of every individual cash flow, including interim distributions at their actual dates. This calculator's approximation only works cleanly for a single lump-sum in and lump-sum out; if your deal pays quarterly distributions along the way, actual IRR will typically run a bit higher than this approximation because you got some cash back sooner.
Which metric should I prioritize?
If you plan to redeploy capital quickly into new deals, prioritize IRR since it reflects velocity of returns. If you're parking capital for a long hold with no reinvestment plan, equity multiple better reflects your actual wealth building since annualized rate matters less when there's nowhere else for the money to go.
What's a good equity multiple for a value-add deal?
1.6x-2.2x over a 4-6 year hold is a common target range sponsors underwrite to for value-add multifamily; ground-up development often targets higher multiples (2.0x-3.0x) to compensate for construction and lease-up risk.
Can equity multiple be high but IRR still be mediocre?
Yes — a 3.0x multiple over 12 years is only about a 9.6% IRR, unremarkable for the risk and illiquidity, while a 1.8x multiple over 3 years is about 21.6% IRR, a much stronger annualized result despite the lower headline multiple.
Accuracy and limitations
- Results are estimates before tax, fees, and inflation unless an input explicitly covers them.
- Rates are treated as fixed for the whole period — variable-rate products will drift from this projection.
- This is educational maths, not financial advice. Check anything contractual with the lender or your accountant.
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Cite this calculator
Writing about this topic? Grab a citation — every link helps keep these tools free.
RevenueLab. (2026). Equity Multiple vs IRR Calculator. Retrieved from https://www.revenuelab.fyi/toolbox/equity-multiple-vs-irr
<p>Source: <a href="https://www.revenuelab.fyi/toolbox/equity-multiple-vs-irr" target="_blank" rel="noopener">Equity Multiple vs IRR Calculator — RevenueLab</a> (2026).</p>
Source: [Equity Multiple vs IRR Calculator — RevenueLab](https://www.revenuelab.fyi/toolbox/equity-multiple-vs-irr) (2026).