CFA Level I · CFA Level I Exam · Alternative Investment Performance and Returns
A private equity fund has paid-in capital of $80 million, cumulative distributions of $20 million, and a residual value of $100 million. The fund's DPI is closest to:
DPI is cumulative distributions divided by paid-in capital, so 20 / 80 gives 0.25. It counts only cash already returned to investors and ignores the unrealized residual value, which is why it is the lowest of the three multiples here.
- A0.25Correct
- B1.25
- C1.50
Explanation
DPI = cumulative distributions / paid-in capital = 20 / 80 = 0.25. The 1.50 figure is TVPI (20 + 100) / 80, which includes unrealized value. The 1.25 figure is RVPI, 100 / 80, which counts only the residual value.
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