CFA Level I · CFA Level I Exam · Alternative Investment Performance and Returns
A fund reports paid-in capital of $50 million, cumulative distributions of $20 million and a residual value of $45 million. The fund's TVPI is closest to:
TVPI is the sum of DPI and RVPI, or total distributions plus residual value divided by paid-in capital. Here (20 + 45) / 50 equals 1.30, so the fund has created total value of 1.30 times the capital that investors paid in.
- A0.90
- B1.30Correct
- C1.60
Explanation
TVPI = DPI + RVPI = 20/50 + 45/50 = 0.40 + 0.90 = 1.30. The 0.90 figure is RVPI alone, and 1.60 results from wrongly using distributions plus residual over distributions-based capital of about 40.
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