A sponsor is purchasing a target in an LBO transaction. After initial all initial funding sources were exhausted, the sponsor still needed a mezzanine financing of $89 million. The mezzanine investor requires 6% cash interest and an equity kicker of $50 million at exit (which is at the end of year 5; that is, at t = 5). Assume the face value of the mezzanine note at exit at is equal to $89 million. Calculate the IRR of the mezzanine investment.

Group of answer choices

18%

20%

16%

14%

22%