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(Solved): Equity Investment = \$100,000LP invests \$100,000 (100%)GP invests \$0 (0%)Equity returned at Resale (e ...

Equity Investment = \$100,000
LP invests \$100,000 (100%)
GP invests \$0 (0%)
Equity returned at Resale (end of Year 5) = \$200,000
Levered Cash Flows from Operations:
Year 1 = \$5,000
Year 2 = \$8,000
Year 3 = \$10,000
Year 4 = 15,000
Year 5 = \$20,000
Limited Partnership Agreement Details:
Operations Tier 1: 10% Preferred Return (Cumulative)
Tier 2: 50/50 Split on Residuals
Resale Tier 1: Return of Capital
Tier 2: 50/50 Split on Residual
a) Calculate the total cash flows for Years 0-5 (including initial investment, operations, and resale) for
both the General Partner and Limited Partner, and the Limited Partner’s IRR.
b) Calculate the Limited Partner’s total cash flows and IRR if the Preferred Return is Non-Cumulative.

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