A fund has an initial investment of $100 million from investors. The investors will receive an 8 percent preferred return. After the preferred return is met, remaining distributions will be split 80 percent to the investors and 20 percent to the fund manager. Funds available for distribution after the regular fund management fee are as follows: Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Fund Cash Flow for Distribution After Management Fee $ 5.00 $ 10.00 $ 20.00 $ 30.00 $ 50.00 $ 40.00 $ 30.00 $ 20.00 $ 10.00 $ 5.00 Required: a. How many years will it take until the investor gets the 8 percent preferred return? b. What will be the split in distributions to the investor and the manager for the year found in which preferred return is achieved? c. What will the investor's IRR be over the entire 10 years? d. What will the total promote earned by the fund manager be for the 10 years?

A fund has an initial investment of $100 million from investors. The investors will receive an 8 percent preferred return. After the preferred return is met, remaining distributions will be split 80 percent to the investors and 20 percent to the fund manager. Funds available for distribution after the regular fund management fee are as follows: Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Fund Cash Flow for Distribution After Management Fee $ 5.00 $ 10.00 $ 20.00 $ 30.00 $ 50.00 $ 40.00 $ 30.00 $ 20.00 $ 10.00 $ 5.00 Required: a. How many years will it take until the investor gets the 8 percent preferred return? b. What will be the split in distributions to the investor and the manager for the year found in which preferred return is achieved? c. What will the investor's IRR be over the entire 10 years? d. What will the total promote earned by the fund manager be for the 10 years?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Hatim has invested in a fund that will provide him a cash flow of OMR 11700 for the next 20 years. If the discount rate is 8.5 percent, what is the present value of this cash flow stream Select one: a. 110721.03 OMR b. 127107.50 OMR c. 124680.54 OMR d. 147108.55 OMR e. None of these
Problem #11: Suppose that on January 1, 2021 the balance on a fund is $14940. Suppose that there are contributions to the fund of $5920, $2954, and $5916 made, respectively, on the first day of March, September, and November 2021. In addition, suppose that there are withdrawals from the fund of $5099 and $9068 made, respectively, on the first day of May and September. Finally, suppose that the balance of the fund on the last day of February, April, August, October, and December 2021 is, respectively, $28739, $36236, $32115, $30305, and $16445. (a) Find the dollar-weighted rate of return for the year. (b) Find the time-weighted rate of return for the year. (A) 5.2% (B) 5.59% (C) 5.33% (D) 5.72% (E) 5.46% Problem #11(a): Select v (A) 9.64% (B) 9.77% (C) 9.25% (D) 9.51% (E) 9.38% Problem #11(b): Select v
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Fund had a value of $32,000 on 1 April 2011. A net cash ow of $7.000 was received on 1 April 2012, a further net cash ow of $8,000 was received on 1 April 2013, and a further net cash ow of $12,000 was received on 1 April 2014. Immediately before receipt of the _rst net cash ow, the fund had a value of $35,000, immediately before receipt of the second net cash flow, the fund had a value of $45,000, and immediately before receipt of the third net cash ow, the fund had a value of $55,000. The value of the fund on 1 April 2015 was $65,.000. The money weighted rate of return per annum for the same period is Select one: a. 4.22% b. 6.19% c. 3.17% O d. 5.16% e. 8.41%
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Chris Lavigne invested a total of $10,200 in the AIC Diversified Canada Mutual Fund. The management fee for this particular fund is 2.55 percent of the total investment amount. Calculate the management fee Chris must pay this year. (Round your answer to 2 decimal places. Omit the "$" sign in your response.) Management fee $
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