Consider a small fund with a $30 million commitment. The GP comprises three partners and several...

Consider a small fund with a $30 million commitment. The GP comprises three partners and several other employees. The fund pays a 2 percent fee on committed capital each year for the operating budget and there is no preferred return to the LPs. The GP is entitled to a carried interest of 20%. The fund has an 8-year life span and a 4-year average holding period of investments, with a 30 percent annual appreciation after fees. The fund invests the $30 million in four equal amounts per year in Years 1 through 4.

If there is only one capital call in year 1, how much is the LP IRR?

Expert Solution

jeff jeffy answered 2 years ago

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