An IRR preference will always give the investor a return that is equal to or better than what the return would be with an IRR lookback.

Question

Quizplus · Accepted Answer

An IRR preference is a type of preferred return that ensures the investor receives a certain minimum internal rate of return (IRR) before any additional profits are allocated to the equity owner. This means that the investor will always receive a return that is equal to or better than what the return would be with an IRR lookback, which only calculates the return based on the actual profits earned. Therefore, the statement is true.

An IRR Preference Will Always Give the Investor a Return