Economics · Financial Performance Metrics
Internal Rate of Return (IRR) is a preferred performance metric in Private Equity because:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1It ignores the time value of money
- 2It measures the absolute dollar profit of an investment
- 3It reflects time-weighted returns, accounting for when cash flows occur✓
- 4It is easier to calculate than simple ROI
Correct answer
It reflects time-weighted returns, accounting for when cash flows occur
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