Question: A private equity closes a fund with a capital commitment of 750 million. It has a capital call of 500 million initially and another 250

A private equity closes a fund with a capital commitment of €750 million. It has a capital call of €500 million initially and another €250 million at the end of Year 1.

The management fee is 2% per annum. At the end of Year 5, a total of €1.0 billion is distributed to its investors, and the fund is left with €500 million in asset value. The multiple of invested capital (MOIC) after five years is closest to:

A. 1.3×.

B. 2.0×.

C. 2.2×.

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