easy · Principles of Finance capital-budgeting
A financial sponsor acquires a firm for $1,000 million (10x EBITDA) using $600 million in debt and $400 million in equity. After 5 years, EBITDA has grown to $140 million, and the debt has been paid down to $350 million.
If the exit multiple is also 10x, what is the investor's IRR?
- 25.0%
- 19.1%
- 15.4%
- 21.3%
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