IRR on investment exit (alternative asset valuation) company, valuation, investment

HuskyGrad2010

CFA CURRICULUM VOL 5, PG 66 EXAMPLE 2

This example tells IRR on company A is 6.1%. How?? I thought it is 12.5% (=5/40).

comments?

5566

IRR from calculator

PV = -40 (original investment)
FV = 45 (profit + original investment)
N = 2
PMT = 0
CPT I/Y

6.07%

since 6.07 < 8 (hurdle rate) then no carried interest is paid

economicz

thanks omar