hard · Principles of Finance capital-budgeting
An LBO sponsor acquires a firm for $1,000M using $300M of equity and $700M of debt. After 5 years, the enterprise value has grown to $1,500M and the debt has been paid down to $400M.
What is the approximate annualized Internal Rate of Return (IRR) for the sponsor?
- 30%
- 22%
- 50%
- 10%
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