b'To make up arrearages in Class B catchup distributions; then Any remaining cash will be split 70/30 between Class A and Class B.Analysis In the preferred return with Class B catchup scenario, on sale,1.As there are no deficiencies in our example, with respect to Class A preferred returns, as soon as Class As unreturned capital contributions were re-paid, the next step in the waterfall would be to make up deficiencies in Class Bs catchup distributions. In this case, Class B would get $143,000 as a catchup for every year it was deficient. Assuming it was deficient every year for 5 years, Class B would be entitled to a catchup distribution of $143k/year ($143k x 5 years = $715k). 2.The remaining distributable cash would be split 70/30 between Class A and Class B. $5M minus $715k (arrearages paid to Class B) = $4, 285,000. Class A would receive $2,999,500 (70%); and Class B would receive $1,285,500 (30%).What was Class As cash on cash return? Class A received distributions of $800k/year for 5 years ($4M) plus $2,999,500 from sale for a total of $6,999,500. Thus, Class A earned an overall return of 69.99% ($6,999,500$10M = 0.699; 0.699 x 100 = 69.99%). Class As annualized return was 69.00%5 years = 13.99%. WhatwasClassBstotalreturninnumbers?ClassBreceived $343k/year for 5 years for a total of $1,715,000 plus $1,285,500 on sale, 213'