Talk:Public Market Equivalent

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Economics

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Private Equity

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Please check for possible error[edit]

This all looks excellent but I cannot recreate the first reference to the 7.77% IRR. Can you tell me how you get it? Thanks.173.58.230.48 (talk) 20:29, 14 November 2014 (UTC)[reply]

Checked and this seems to be correct[edit]

You can reproduce this 7.77% by entering in excel =IRR(-100,-50,60,100,20) Yoqtan (talk) 15:39, 14 December 2014 (UTC)[reply]

reply to your reply[edit]

It seems that someone is now adding another period to the IRR from the prior example, yet are not showing what happened to the index in that extra period. I thought that the final 'cash flow' is distributed proceeds plus NAV. If so, I would expect that the IRR result would be the same as the 8.13% in the prior example - and you get 8.13% by only having four, not 5, cash flows, with the 4th one being the 120. I thought the point of the example was not to add another period but, rather, to change the index return in one of the periods, so as to make a NAV go negative. And then to show how the PME+ would deal with it. Forgive me if I am missing something. Thanks.

ok[edit]

Hello unknown user, I see what you mean. Between the two PME examples, we're adding a period and that can be confusing. I changed the first example so that everything is on 5 periods, with the valuation having its own period. I also changed the KS-PME and direct alpha examples for consistency Yoqtan (talk) 15:37, 24 March 2015 (UTC)[reply]

More errors[edit]

Forgive me for saying this, but I think this work is sloppy. Part of the problem may be that you sometimes don't show enough decimal places (you should), but I don't think that is much of it.

For the 2nd PME example, I get an ending value of -5.47, not -5.69. For the PME-plus example, I think the PME investment ends with $19.20, not $20. For the mPME example, I get an IRR of 2.02%, not minus 0.11%. Part of the reason is as follows: We agree that the next to last modified NAV is about $13.01. If so, how do you manage to get a final modified NAV of $8, when the last period return is +20%. I get about 13.01 x 1.2 = $15.61.

Please check all your math. If you can, somehow, post an EXCEL file, I suspect I can help find the errors. — Preceding unsigned comment added by 108.0.236.125 (talk) 04:54, 26 March 2015 (UTC)[reply]

[edit]

Happy to have such assiduous readers :-). In some of the calculation, I was taking 125 as the final value instead of 120. Corrected that, thank you for spotting it. I don't think there is a way to attach an excel file ? (is there ? ) Yoqtan (talk) 14:20, 11 April 2015 (UTC)[reply]