EM ( Equity Multiplier)

1 Reply

Is the EM as simple as it seems? When a see an EM of 2.5, I understand that the investor gets back $2.50 for every dollar invested. But does that exclude the initial $1 investment?

What would make more sense to an investor and what is the more common to see...IRR or EM?

Thanks,

Lisa

EM is exactly what it seems. It's a coefficient you multiply your equity on. EM of 2.5 means $1 of principal and $1.5 of profit.