## Search Results

### Calculating and Estimating Internal Rate of Return

Whats the best way to do an IRR calc in your head? is there a simple calculation and relationship when you think about initial investment, sale price and time period? just for back of envelope calcs when youre sitting in a meeting or an interview. thank y ...

*51 comments - 0 silver bananas - Apr 12 2019 - 3:07pm - hoyer*### LBO Models in Your Head

Has anyone ever been asked to do an LBO and M&A models off the top of their head? Pen & Paper given with financials on a sheet but not much time (around 3 minutes) to calculate and walk through answer. Basically you have to calculate as you go thr ...

*28 comments - 0 silver bananas - Apr 12 2019 - 2:57pm - couchy*### 5 Caps- What kind of returns can I expect

I have a question regarding what kind of returns I can expect from underwriting multi-family value add acquisitions at a 5 cap. I am typically in the neighborhood of low double-digits IRR, CoC mid-single digits. Some basic assumptions: 10 year hold stabil ...

*60 comments - 1 silver bananas - Sep 6 2015 - 12:30pm - john rolfe*### Read 500 Pages Per Day

Investors are constantly looking for nuggets of wisdom from the Oracle of Omaha, Warren Buffett, so this tidbit on Omaha.com caught our eye. It's just one quote from Buffett. He was at a 165 person Columbia University investing class, and one of the ...

*51 comments - 0 silver bananas - Jun 2 2013 - 10:39pm - Hooked on LEAPS*### IRR- NPV 0, why is this good? Confused

hey guys, would appreciate some of your insights on IRR. from what i understand, IRR is the discount rate at which the NPV of the project is 0. I understand PE firms like to see 20%+ IRR. I seem to be confused as to the point of calculating IRR if IRR jus ...

*13 comments - 2 silver bananas - Jul 23 2018 - 6:42am - analyst3000*### Why IRR is so high on a compressed timeline?

Hi everybody, I am currently underwriting a 13 units condo development project that has total length of 15 months from close to sale. 15% return hurdle and 70/30 promote slit. The problem is that the IRR comes out 38% with a 1.65x. If I would adjust the I ...

*12 comments - 2 silver bananas - Apr 6 2018 - 10:47am - Miaospirit*### Negative IRR

Let's say you have 2 scenarios: SCENARIO 1 Year 0 (initial investment): 150 Year 1 (end of investment): 140 Money Multiple: 0.93x IRR: (7%) SCENARIO 2 Year 0 (initial investment): 150 Year 1 (investment year): 0 Year 2 (end of investment): 140 Money ...

*24 comments - 0 silver bananas - Jan 23 2015 - 5:50am - woody_banker*### Terminal Value for IRR Calculation- Restaurant Franchise

I am calculating IRR from a 10 years projected cash flow + a terminal value. The terminal value I understand is usually calculated as FCFF(1+g)/(r-g). Incase of using terminal value for IRR calcuation should the r= cost of capital or r=IRR (in this case i ...

*15 comments - 1 silver bananas - May 26 2016 - 3:10am - johnsmith123456*### Confused with IRR and YTM of a bond

Hi guys, I have a very simple question that has been confusing me a bit recently. The best way to describe it is to give a simple example. Let's imagine a very simple 5 year %10 Annual Coupon Bond trading at 100. The current interest rate on similar ...

*17 comments - 0 silver bananas - Aug 18 2016 - 1:20pm - Css*### Contribution to IRR

Hi guys, I am wondering if someone could help with IRR contribution. For example, I have a stream of Cash flows that gives me an IRR of say 10%. If I then decompose those cash flows into different categories (say 3) I will get an IRR for every category an ...

*10 comments - 1 silver bananas - Jul 11 2017 - 10:22am - fsanclemente*### Cap rates vs. IRR

What's the difference between them? Do you use cap rates or IRR to value RE assets? Wouldn't it make sense to go for a a project with a cap rate of say 15%? How do you fundamentally calculate cap rates? and I dont mean income/purchase price....i ...

*14 comments - 0 silver bananas - Jun 2 2013 - 7:30pm - fomc*### How much of the overall waterfall does a sponsor/GP generally earn in a typical deal?

At the end of the day, on a typical opportunistic fund returning 16%IRRs to the LP, how much of the cash flows does the GP generally earn on the promote? Obviously there is the asset management fee, and could be other fees, but I just want to know what is ...

*6 comments - 2 silver bananas - Jan 29 2019 - 5:58pm - basementflat02*### Linking DCF to IRR analysis

Hi guys, I need a help! i just finished building my dcf model. My boss asked me what is the IRR return? How can i calculate that? the purpose of my DCF model is to find out how much i should pay for that company. but i dont know how to figure the IRR retu ...

*13 comments - 0 silver bananas - Oct 11 2012 - 4:33am - cipits*### IRR / cap rate help

Don't know much about CRE so any help would be much appreciated. I am presented with an opportunity to purchase a property for $10,000,000. This is my NOI: Year 0:-10,000,000 1: $579,799.80 2: $603,415.90 3: $627,864.92 4: $653,174.34 5: $10,679,372. ...

*10 comments - 0 silver bananas - Oct 6 2015 - 12:03pm - Madras*### XIRR vs (1+IRR)^12-1

Any thoughts/preferences on using the XIRR function vs Effective Rate IRR when modeling development projects? Both account more time value- is one more accurate than another? IRR effective rate ...

*7 comments - 1 silver bananas - Jan 27 2018 - 11:59am - mrfcflanker*### Using Bloomberg to find PE/VC performance/analytics????

Hello everyone, I currently completing a case study for a PE fund of funds interview. Essentially I am to pick 2 of 6 PE firms to invest with if they were to raise a new fund today, so I am trying to find the historic returns and any other data I could us ...

*8 comments - 0 silver bananas - May 20 2014 - 4:52pm - broseph_stalin*### Cash Multiple to IRR

First time I (and the office) have seen this so am just sounding out WSO. To calc. IRR by (cash multiple)^(1 / time period)-1, is this common? best practice? or just lazy? Cheers for any input. How To Calculate IRR Manually Since you can't calculate ...

*8 comments - 0 silver bananas - Feb 24 2014 - 10:54am - oreos*### LBOs: Debt Repayment vs. Dividends?

Just wondering, when modelling LBOs is it market practice to assume you: a) amortise debt & forsake dividends over the holding period in favour of lower interest expense & a higher equity value at exit, or b) pay dividends & forsake debt repay ...

*7 comments - 0 silver bananas - Jul 2 2015 - 5:43pm - Zweihander*### Is there an IRR formula

I am told there are no IRR formulas when number of cash flows excess 5 Is it so? Is there an IRR formula to find internal rate of return when number of cash flows exceed 5? For example, is it possible to find IRR of the following investment using a " ...

*7 comments - 0 silver bananas - Jun 27 2014 - 12:06am - AbrahamA*### Question about calculating IRR on a rolling basis

Say the investment horizon is 3 years. In year 1, you invest 4MM at 11c/share. In year 2, you invest 3MM at 20c/share. If the stock price by the end of year 2 A. falls to 10c/share or B. rises to 25c/share, what is your total return for your investment? S ...

*5 comments - 0 silver bananas - May 9 2016 - 6:06pm - StreetofBulls*### LBO Sensitivity Question (data tables)

So I am somewhat new to LBO modeling as we don't really do it at my firm but I am trying to learn because I find it interesting and eventually want to end up in PE. I work with data tables to perform sensitivities every day, but in the context of a L ...

*6 comments - 0 silver bananas - Jan 17 2010 - 2:33pm - Solaxun*### IRR with Dividend Recap

How do you calculate IRR when there are interim cash flows like the scenario where a PE firm does a dividend recap in year 3 and exits in year 5? I know excel can do it for you with the IRR function, but what is the actual formula? How is excel calculatin ...

*5 comments - 0 silver bananas - Dec 27 2014 - 7:01pm - Hernandez*### IRR on affordable high-rise condo deal???

I am talking to a few hnwi in the next week about buying/recap. An entitled and permitted affordable condo highrise with 180 units. The stack has $35M in bank loan, $15M loan from the state, and $Xm for the land. Land is $7-8M. In place with very little n ...

*4 comments - 1 silver bananas - Jan 28 2017 - 4:21am - Agentorange*### IRR- 3 Year vs 5 Year Hold

As a Financial Analyst, I am frequently modeling commercial real estate deals. Typically, I will do a 3 Year and 5 Year analysis. Most of the time, the 3 year analysis will yield a higher IRR than the 5 Year analysis. However, in the current deal I am mod ...

*4 comments - 0 silver bananas - Jun 15 2016 - 11:42am - WhartonWallStreet*### Valuation vs. Returns

Hi all Potentially rookie question but here goes... Imagine I have a company in which I want to make a $10m investment. Let's assume based on DCF that I value the company at $90m pre-money. Free cash flow for the company is as follows: Year 1: $10m Y ...

*3 comments - 1 silver bananas - Jul 13 2018 - 2:22am - iceviking*### IRR vs UFCF. whats the difference!

can someone explain to me the difference between IRR vs UFCF vs LFCF? Thanks very much! IRR ...

*4 comments - 0 silver bananas - Dec 7 2013 - 2:55am - dg100*### Equity IRR

What is the way to calculate "Equity IRR " as opposed to Project IRR which is the standard IRR. We all know how to calculate the standard IRR which would be defined as the discount rate where inflows=outflows but this term is something i've ...

*4 comments - 0 silver bananas - Aug 17 2009 - 5:00am - greatgolfer*### Multiple outflows in IRR calculation

What is the correct way to calculate the IRR if there are multiple cash outflows (at different times) which all happened before any inflows? For example, the cashflows may look like this:-600,-150, 0,-150, 0, 0, 18000 Is it as simple as solving r for 0 =- ...

*3 comments - 0 silver bananas - Apr 6 2017 - 3:33pm - skyork*### Weird IRR pattern

Hi everybody. I work at a private equity firm and recently stumbled upon a weird IRR pattern. A simplified example looks the following way. Say, there are two sets of cash flows: (1) =-4; 2; 4;-3;-1; 6;-3; 8 (2) =-4; 2; 4;-4;-1; 6; 0; 8 The IRR of the fir ...

*3 comments - 0 silver bananas - Mar 6 2017 - 6:28pm - Fresh Grad*### Calculating IRR of cash flows with terminal value

I have a project with an initial outlay (Year 0) and 10 years of forecasted positive FCFFs and FCFEs. After 10 years, I use a Gordon/Perpetuity Growth Model to determine Terminal Value. I built DCF model and discounted FCFFs with WACC (to arrive at Enterp ...

*3 comments - 0 silver bananas - Sep 13 2016 - 6:21pm - Interesnea*### Terminal Value for IRR Calculation

I am calculating IRR from a 10 years projected cash flow + a terminal value. The terminal value I understand is usually calculated as FCFF(1+g)/(r-g). Incase of using terminal value for IRR calcuation should the r= cost of capital or r=IRR (in this case i ...

*3 comments - 0 silver bananas - Jun 14 2016 - 7:19pm - johnsmith123456*### Public returns databases

Apologies- I'm sure this thread already exists but I couldn't find it anywhere. Does anyone know which large pension funds / institutional investors publish their PE portfolio returns. I think I've seen CALPERS and CALSTRS on their websites ...

*3 comments - 0 silver bananas - Mar 24 2016 - 5:47pm - modelcitizen1*### New Fund IRR calculation and prediction

In the real world, how do prospective PE firms model IRR projections? For the pitch deck, is it common to sensitize and demonstrate several possible outcomes, e.g. expected, over-, and underperforming? 2. If a fund invests in different asset classes and/o ...

*2 comments - 1 silver bananas - Apr 14 2019 - 11:18am - latetothegame*### Corporate Finance- IRR Calc

When LBO modeling for a private equity fund, you typically use an exit mulitple of EBITDA / revenue / some industry metric for the terminal value to calculate the cash inflows for the IRR calc. For a corporatation, which isn't in the business of flip ...

*3 comments - 0 silver bananas - Nov 11 2011 - 8:30am - Jack B.*### Calculating IRR on an acquisition with immediate cash flow...

I am trying to figure out the best way to model cash flows for an acquisition that will have immediate cash flows. These are residential rental portfolios, so the day we acquire the property we begin "receiving"cash flow. Do I put the initial ac ...

*2 comments - 0 silver bananas - Jun 19 2014 - 5:24pm - iellis*### Calculating Fund IRR after recent portfolio IPO

Hi All, Unfamiliar situation for me here. We recently IPO'd a company that has done extremely well post going public (Up 300%-400% from pricing). We now need to calculate the fund IRR as of 9/30/13. The one portfolio company has done so well, it' ...

*2 comments - 0 silver bananas - Oct 4 2013 - 1:32am - TheBigBambino*### IRR Funds vs Funds of funds

Hello, I am looking for the differences from an LP point of view between investing in PE Fund vs investing in Fund of Fund. Let's assume (purely hypothetical) that an LP had the choice to invest in a fund OR a fund of fund which have exactly the same ...

*2 comments - 0 silver bananas - Oct 31 2011 - 12:43pm - Bluestone*### quick questions on control premium, IRRs, LBO

hey all, im preparing for FT interviews and have a few quick technical questions. 1) why do companies pay a control premium for a target company, and how do they decide how much to pay? is it simply through the bidding process? 2) at the company i worked ...

*2 comments - 0 silver bananas - Oct 4 2009 - 6:27am - pedigreed monkey*### Question about IRR

Fellow monkeys, I was wondering if anyone knew how to calculate IRR if given EBITDA, Revenues, and Expenses for say years 5,6 and 7 of a certain project, with a terminal value of 1 year ebitda. Does anyone know the equation or how to do this in excel? I f ...

*2 comments - 0 silver bananas - Apr 30 2009 - 10:37am - GreedIsGoodGekko*### Calculating Investor Gross IRR where you have cash inflows before outflows

We have a new fund (1 year old) which uses a revolving line of credit to fund investment purchases. We used the line multiple times before we called capital from Investors for the first time. Investors received distributions before they ever contributed c ...

*1 comment - 1 silver bananas - Nov 30 2018 - 9:32am - newmantim2006*### IRR > WACC

Hey all, I have the following cash flows. CF0 =-100 CF1 = 40 CF2 = 30 CF3 = 80 I solved for IRR and I received 20%. Can I please add a bit of context to this question so I can further expand my knowledge? I want to assume that the $100 I borrowed is from ...

*1 comment - 1 silver bananas - Jul 18 2018 - 11:22am - JoeySalads*### Why IRR > WACC & not TWR > WACC

Hey all, Was solving some problems related to annualizing returns and I had the following scenario: I borrow $100 and invest it, and I get the following results: Year 1: 15% Return-> Ending CF: 115 Year 2:-10% Return-> Ending CF: 103.5 Year 3: 5% Re ...

*1 comment - 1 silver bananas - Jul 7 2018 - 8:58am - lebpure594*### What Is Internal Rate of Return (IRR)?

Internal Rate of Return or IRR is a financial metric used to discount capital budgeting and to make the net present value of all future cash flows equal to zero. For this reason, it is used alongside a Discounted Cash Flow analysis. IRR is an estimate of ...

*- silver bananas - Apr 23 2012 - 8:30am - WallStreetOasis.com*### IRR Attribution / Decomposition Analysis

Hi all, Has anyone actually done a full scale IRR decomposition like the detailed example (exhibits 2 and 3) presented in this McKinsey article? http://www.mckinsey.com/insights/corporate_finance... Would appreciate any excel examples and/or hear your tho ...

*- 0 silver bananas - Dec 14 2015 - 12:57pm - Kenn Daniel So*### How would mortgage payments affect IRR?

How would mortgage payments affect IRR? Mortgage IRR ...

*- 0 silver bananas - Oct 30 2014 - 9:43pm - 21*### Finding an alternative investment that has the same IRR

If one is given a set of cash flows that are in uneven amounts, is there a way to find an alternative investment (one that has a different set of uneven cash flows) that has the same IRR- internal rate of return as that of the original investment. For exa ...

*- 0 silver bananas - Jun 26 2014 - 11:17pm - AbrahamA*### Institutional Real Estate investing- cash flow model

Hi! I am looking for someone who is familiar with institutional real estate investing in the Commercial Real Estate space. In the last days I have spent some time to find how deal structures look like in that segment. Especially how the refinancing of suc ...

*1 comment - 0 silver bananas - Jun 6 2012 - 7:37pm - MS10*### IRR vs. equity return

Hi, I have a very basic question as I'm preparing for PE interviews- and I am embarrassed to ask people at work. Basically, some sample models I see show equity returns in an LBO model- i.e. using the rate function in excel, the purchase price equity ...

*1 comment - 0 silver bananas - Jul 13 2009 - 8:49am - phinla_lars*### Question regarding IRR of a small company

Fellow monkeys, ...

*1 comment - 0 silver bananas - May 5 2009 - 12:54pm - GreedIsGoodGekko*### IRR for Health Club

I work in Corp Fin for one of the largest healthclubs (think Chap 11) and am working on a new club IRR analysis. The problem that I am having is whether or not to include non-cash rent in my analysis, and whether to have t=0 the first month non-cash appea ...

*1 comment - 0 silver bananas - Apr 27 2009 - 5:42pm - d52strick9*