Hi Monkeys,
I am struggling with the below question (to be done on paper) and thought I could lend some help with this community.
My question specifically is how do you approximate a IRR with multiple period cashflows? How would you go about solving this?
"A PE firm acquires a $150 EBITDA company for a 10x multiple using 60% Debt. The company’s EBITDA increases to $200 by Year 3, $225 by Year 4, and $250 by Year 5, and it pays off all its Debt by Year 3. The PE firm sells its stake evenly over Years 3 – 5 at a 10x EBITDA multiple. What’s the approximate IRR?"
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