How do you calculate the IRR for investors in a biz where they’ve rec’d both dividends and tax losses?
February 27th, 2009 by admin
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kevin J asked:
For example, the original investors put $10 million into the company. The company made $5 million of excess cash flow in year five that was returned to the investors in the form of a dividend. In the interim years (e.g. years 1-4 and years 6-10), the company posted losses that the investors were able to use to offset taxable income. How can the IRR be calculated for the entire 10 year life of the investment?
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For example, the original investors put $10 million into the company. The company made $5 million of excess cash flow in year five that was returned to the investors in the form of a dividend. In the interim years (e.g. years 1-4 and years 6-10), the company posted losses that the investors were able to use to offset taxable income. How can the IRR be calculated for the entire 10 year life of the investment?
Do Your Taxes The EASY Way?For FREE. Use TurboTax Federal Free Edition today. Start Now
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