Investment cash flow, IRR & equity multiple
Measure cash contributed, cash received and the timing of returns.
Your scenario
Equal annual periods, initial cash flow at time zero. Include all capital calls and final sale proceeds net of debt and transaction costs. IRR does not measure risk or dollars earned.
How the model works
Equity multiple = total positive cash flows ÷ absolute total negative cash flows. IRR solves NPV = 0 for equal annual periods.
Worked illustration
A $1 million contribution followed one year later by $1.1 million has a 1.10× multiple and a 10% annual IRR.
Record every contribution and receipt
Start at time zero and use one value per equal annual period. Enter contributions as negative numbers and receipts as positive numbers. Include acquisition equity, later capital calls, net operating cash actually made available and net sale proceeds after the modeled payoff and costs. If money remains retained in an operating account, do not also count it as an owner distribution in the same period.
The equity multiple compares all positive modeled cash with all negative modeled cash. It therefore includes later contributions as invested capital. Omitting a capital call can materially overstate both multiple and IRR. Enter amounts without thousands separators because commas delimit periods. Up to one hundred annual periods are supported.
Recognize when IRR is ambiguous
IRR is a discount rate that makes the entered sequence’s NPV zero. An ordinary initial contribution followed by receipts often has one economically useful root. Cash flows that reverse sign repeatedly can have more than one. This tool searches a finite numerical domain and declines to present a single preferred IRR when it detects multiple roots. A numerical search is not a proof that all mathematical roots have been found; do not treat one reported root as a complete assessment of a complex sign-changing sequence. A repeated root can exist even without the NPV curve crossing zero.
No result is a promised return. Equal annual periods are not the same as actual contribution dates; irregular dates need a date-based model such as XIRR. An early small distribution can increase IRR while a longer hold produces more total dollars. Compare timing, multiple, NPV at your required return, total capital exposed and downside cash needs. Member-level fees, taxes and waterfall priorities require each investor’s own complete cash sequence.
What to check before relying on the result
Irregular dates require XIRR. Sequences with multiple sign changes can have multiple IRRs; the tool suppresses a single IRR when multiple roots are detected.
Model an adverse scenario as well as the expected outcome. Change one assumption at a time to identify what drives the result, then test combinations that could occur together. A property can meet a modeled financial threshold and still fail diligence, legal requirements or lender approval.
Keep the cash-flow definitions consistent
Distinguish recurring property operations from tenant improvements, leasing commissions, capital expenditure, financing costs and entity-level distributions. Verify whether reserves are expenses, funding requirements or cash movements in the documents you are analyzing. A cash-flow convention must remain consistent across the model and the comparison.
Research context
Consult the source material for this topic. The model is an original educational calculation, not a reproduction of a lender’s underwriting system. The initial numbers are hypothetical inputs rather than current market terms. No scenario inputs are transmitted or saved by this calculator.