The situation
Entry enterprise value is ₹200 crore, funded with ₹110 crore debt and ₹90 crore sponsor equity. At year five EBITDA is ₹32 crore, exit multiple is 8×, and net debt is ₹70 crore. Ignore fees and distributions.
Your task
What are exit equity, MOIC and annualized return?
Reveal step-by-step solution
Set up the problem
Exit enterprise value = ₹32 × 8 = ₹256 crore.
Work through the numbers
Exit equity = ₹256 − ₹70 = ₹186 crore. MOIC = ₹186 ÷ ₹90 ≈ 2.07×.
Interpret the result
Annualized return ≈ (186 ÷ 90)^(1/5) − 1 = 15.63%. Check that cash generation can support the assumed debt paydown.
What to remember
Balance entry funding, bridge exit EV to equity and use cash-flow dates when calculating IRR.