dashingdude Wrote: ------------------------------------------------------- > So what is the right answer? I picked up 12% 'cuz > I have friends working in this industry and always > brag about double digit annualized returns. > Therefore chose to select 12% instead of -ve or > paltry 4% return (though I understand that the > numbers given in the exam could be well dummy) I like the part “friends working…brag…” logic to answer cfa test. I also use this kind of unbeatable logics to answer some qs. My answer is 4% though.
i used the CFs : CF0=Capital called at beginning of t=1 CF1=Operating profit at t=1 - capital called at beginning t=2 (or end of t=1) CF2=Operating profit at t=2 - capital called at beginning t=3 CF3=Operating profit at t=3 - capital called at beginning t=4 & Calculated IRR. Don’t remember the answer though…
Answer for this one is 12. Similar example is in CFAI book under PE Study session. Just straight calculation.
right goel_ar… initial cap called down 30000 op result -3000 next year cap called down 20000 and had positive op results after that. something like 12, 13%