medium · Private Equity paper-lbo
Two investment scenarios return a 2.0x MoIC. Scenario A returns all $200 at Year 5. Scenario B returns $100 at Year 2 and $100 at Year 5.
Which statement correctly describes the IRR impact?
- Scenario B has a lower IRR because the money is pulled out early
- Scenario A has a higher IRR because the capital was 'at work' longer
- Both have the same IRR because the MoIC is the same
- Scenario B has a higher IRR (18%) than Scenario A (15%)
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