T
TXdore
Here's another cashflow problem. And it has two parts.
Part 1. The Limited Partner (LP) and General Partner (GP) mak
contributions on a 90%/10% ratio. Here's an example cashflow. "Year" i
A1.
A B C D
Year LP GP NCF
0 -900 -100 -1,000
1 0 0 50
2 0 0 175
3 0 0 170
4 0 0 180
5 0 0 185
6 0 0 190
7 0 0 200
8 0 0 205
9 0 0 210
10 0 0 215
Here's the order of distribution:
1. LP receives its preferred rate of 8%
2. GP receives a preferred rate of 8%
3. LP and GP capital is returned para passu (90%/10% respectively)
4. 80% to the LP and 20% to the GP until the LP has achieved a 10% IRR
5. 70% to the LP and 30% to the GP until the LP has achieved a 12% IRR
6. 60% to the LP and 40% to the GP until the LP has achieved a 14% IRR
7. 50% to the LP and 50% to the GP thereafter
I have capital accounts and preferred return accounts for bot
partners, so I figured out numbers 1 thru 3. But how do I calculate th
distributions for numbers 4 thru 7? See, the difficulty is that the IR
hurdle is the LP's IRR, not the Project's Total IRR.
Part 2. If that wasn't difficult enough, let's assume the project i
real estate. The property can be sold in any year. Here are the sal
proceeds (column E):
SaleCF
0
1,000
3,500
3,400
3,600
3,700
3,800
4,000
4,100
4,200
4,300
I've attempted this by using a matrix like this:
Blank YrSold0 YrSold1 YrSold2 YrSold3 YrSold4 …
OperYr0 -1,000 -1,000 -1,000 -1,000 -1,000 …
OperYr1 0 1,050 50 50 50 …
OperYr2 0 0 3,675 175 175 …
OperYr3 0 0 0 3,570 170 …
OperYr4 0 0 0 0 3,780 …
OperYr5 0 0 0 0 0 …
OperYr6 0 0 0 0 0 …
OperYr7 0 0 0 0 0 …
OperYr8 0 0 0 0 0 …
OperYr9 0 0 0 0 0 …
OperYr10 0 0 0 0 0 …
Honestly, if you can show me an elegant way to solve Part 1, I think
can figure out Part 2.
I do have a solution to this, but it ain't pretty or elegant. If fact
it takes 376 rows and 13 columns, and adds 1/2 mg at least to m
spreadsheet. But it involves finding the FV of the NPV o
contributions and distributions
Part 1. The Limited Partner (LP) and General Partner (GP) mak
contributions on a 90%/10% ratio. Here's an example cashflow. "Year" i
A1.
A B C D
Year LP GP NCF
0 -900 -100 -1,000
1 0 0 50
2 0 0 175
3 0 0 170
4 0 0 180
5 0 0 185
6 0 0 190
7 0 0 200
8 0 0 205
9 0 0 210
10 0 0 215
Here's the order of distribution:
1. LP receives its preferred rate of 8%
2. GP receives a preferred rate of 8%
3. LP and GP capital is returned para passu (90%/10% respectively)
4. 80% to the LP and 20% to the GP until the LP has achieved a 10% IRR
5. 70% to the LP and 30% to the GP until the LP has achieved a 12% IRR
6. 60% to the LP and 40% to the GP until the LP has achieved a 14% IRR
7. 50% to the LP and 50% to the GP thereafter
I have capital accounts and preferred return accounts for bot
partners, so I figured out numbers 1 thru 3. But how do I calculate th
distributions for numbers 4 thru 7? See, the difficulty is that the IR
hurdle is the LP's IRR, not the Project's Total IRR.
Part 2. If that wasn't difficult enough, let's assume the project i
real estate. The property can be sold in any year. Here are the sal
proceeds (column E):
SaleCF
0
1,000
3,500
3,400
3,600
3,700
3,800
4,000
4,100
4,200
4,300
I've attempted this by using a matrix like this:
Blank YrSold0 YrSold1 YrSold2 YrSold3 YrSold4 …
OperYr0 -1,000 -1,000 -1,000 -1,000 -1,000 …
OperYr1 0 1,050 50 50 50 …
OperYr2 0 0 3,675 175 175 …
OperYr3 0 0 0 3,570 170 …
OperYr4 0 0 0 0 3,780 …
OperYr5 0 0 0 0 0 …
OperYr6 0 0 0 0 0 …
OperYr7 0 0 0 0 0 …
OperYr8 0 0 0 0 0 …
OperYr9 0 0 0 0 0 …
OperYr10 0 0 0 0 0 …
Honestly, if you can show me an elegant way to solve Part 1, I think
can figure out Part 2.
I do have a solution to this, but it ain't pretty or elegant. If fact
it takes 376 rows and 13 columns, and adds 1/2 mg at least to m
spreadsheet. But it involves finding the FV of the NPV o
contributions and distributions