Level 5: Analysis · Exercise 60 of 60 · Pro

IRR grid by entry and exit multiple

A financial modeling exercise from Modeldrill. Solve it with a live spreadsheet grid in your browser, with Fill right and Fill down, and it is checked the moment you submit.

The task

Fill the grid B9:F12 with the IRR for every pairing of entry multiple (column A) and exit multiple (row 8). Entry equity is the entry multiple times entry EBITDA less debt at entry; exit equity is the exit multiple times exit EBITDA less debt at exit; the IRR is (exit equity / entry equity) ^ (1 / years held) - 1. One formula, filled right and down.

What this exercise teaches

Reading down a column shows how much paying one turn more at entry costs in return; reading across shows the dependence on exit pricing. The diagonal, where entry and exit multiples match, isolates the return from growth and deleveraging alone.

A hint if you get stuck

The exit multiple lives in row 8 (lock the row: B$8), the entry multiple in column A (lock the column: $A9), and the five inputs in B2:B6 are fully locked.