Which factor does CAGR calculation not consider unlike IRR?

CAGR, or Compound Annual Growth Rate, is a measure used to determine the mean annual growth rate of an investment over a specified time period, assuming that all profits are reinvested. It provides a smooth annual growth rate and is often used to compare the growth rates of investments over time.

One key characteristic of CAGR is that it does not take into account the timing of cash inflows and outflows. Unlike Internal Rate of Return (IRR), which considers the timing of each cash flow during the investment period, CAGR simply looks at the initial and final values of the investment. It calculates growth based on the total period, treating the growth as a compounded return without differentiating when cash flows occur. This makes CAGR a simple and straightforward metric but limits its ability to fully capture the complexities of an investment's performance that IRR accounts for, such as uneven cash flows over time.

The other options—investment's beginning value, investment's ending value, and number of years—are all fundamental components used in the calculation of CAGR. The beginning and ending values are essential in determining the growth achieved, while the number of years provides the timeframe over which this growth is assessed. Therefore, the correct answer highlights the absence of timing consideration in CAGR relative to