Guys can you help me figure out how they get the USD 2.5 million in the answer. i am clueles. It is the 3rd sentence of the answer. thanks
Sorry I am a little late and hope you would have figured it out by now but here goes you use the simple formula H x U divided by U - C. you arrive at a break even point of 112.5 million. Since the catch up is 100%, the investor gets their original investment (100mil) plus their preferred return (10mil). Every dollar up until the break even point goes to the general partner which is where the 2.5mil comes in. Everything after that is split accordingly (80/20). Hopefully this will be one of my essay questions! lol.