When do we use irr and when do we use cagr Why does inflation happen

Question

Accepted Answer

IRR is used to calculate the rate of return on an investment, while CAGR is used to measure the growth rate of an investment over a period of time.

IRR is used when we want to calculate the rate of return on an investment based on the cash flows it generates.
CAGR is used when we want to measure the growth rate of an investment over a period of time, taking into account the effect of compounding.
IRR is useful for comparing different investment opportunities, while CAGR is useful for evaluating the performance of an investment over a specific period of time.
Inflation happens when there is an increase in the general price level of goods and services in an economy, resulting in a decrease in the purchasing power of money.
Inflation can be caused by factors such as an increase in the money supply, a decrease in the supply of goods and services, or an increase in demand for goods and services.
Inflation can have both positive and negative effects on an economy, depending on the level and rate of inflation.

Accepted Answer

IRR is the discounted value which make NPV = 0. (Cash inflow - cash outflow). cagr is used to justify the particular investments growth every year on compounding basis.

Inflation increases with decrease in CRR and repo rate. This means banks will have more money in their hands and they circulate the money in to the system in the form of credit. So people could target a few particular product to purchase and demand of that particular product will increase which leads to inflation.

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When do we use irr and when do we use cagr Why does inflation happen

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