medium · Private Equity
A private equity fund uses a subscription line of credit to delay capital calls by 12 months.
If an investment generates a 2.0× MoIC over a 4-year hold from the time the fund calls capital, but the sub-line was used for the first year, what is the 'leveraged' IRR compared to the 'unleveraged' IRR?
- Leveraged: 26.0%; Unleveraged: 18.9%
- Both are 18.9%
- Leveraged: 100%; Unleveraged: 50%
- Leveraged: 18.9%; Unleveraged: 26.0%
Sign up free to see the explanation and track your rank →
More Private Equity practice
- If the GP receives a 20% carry on the profit from Deal A immediately, and the fund eventua
- Following the investment, what is the investor's ownership percentage in the company, assu
- What is the Interest Coverage Ratio?
- A private equity firm is calculating a 'Public Market Equiva… — If the KS-PME score is 1.1
- A sponsor provides an 'Equity Cure' to a portfolio company. What is the standard purpose o
- What is the new effective conversion price for the growth equity investor?
- Which company will report a higher 'Gross Margin' and a higher ending 'Inventory' value on
- What is the company's Interest Coverage Ratio?