The equity for development deal

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A developer puts in 5% equity and a fund puts in 95% of the equity for a development deal. Cash flow is to be distributed with the following order of priorities (e.g., "the waterfall"): • Preferred return is 10% pro rata to both parties. • The promote is 20% to the developer then the balance of proceeds pro rata. • The acquisition and development costs of a deal (occurring at time 0), are $1 million. • At the end of the first full calendar year the project is sold for $1.1 million. • What are the IRR and $ returns to the developer and the fund? • What if the project is sold for $3.0 million, what are the IRR and $ returns to the developer and the fund.

Reference no: EM131500912

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