ABC fund successfully raised $18Billion. At the beginning of 2018, it called down $200 million and made its first investment. This first investment was a huge success and was worth $760 million by the end of 2020. According to the LP agreement, ABC Fund needs to return the capital ($200million) and distributes 80% of the profits to its LPs. At the beginning of 2019, ABC Fund called down $400 million and made its second investment. Unfortunately, this is a complete failure. The investment had to be liquidated by the end of 2020 at a price of $50 million. Assuming there is no other capital call down and investment, estimate the following as the end of 2020.

1. what is the IRR of the first and second investment respectively?
2. What is the net IRR to LPs?

(Show all formula)

Answer rating: 100% (QA)

To calculate the Internal Rate of Return IRR for each investment and the net IRR to LPs you can use ... View the full answer