LBO & Paper LBO
What's a fast way to take a square root or nth root in your head for paper LBO IRRs?
Model answer
For a 4-year hold, IRR = MOIC^(1/4) = sqrt(sqrt(MOIC)) — chain two square roots. For 2-year, just one square root. For 3- and 5-year, interpolate against memorized anchors (2x/3yr≈26%,…
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