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a. Recalculate the yearly cash flows.

a. Recalculate the yearly cash flows.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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An endowment invests $150,180,000 in WeGrow II, an early-stage venture fund with a 20% incentive fee and a 5% preferred return [hurdle rate]. The fund invests in the following companies (for simplicity, ignore staged financing and management fees; assume instead that all investments occur at the end of their denoted year): Investment (Year Invested) $ 35,030,000 (2) $ 20,030,000 (2) $ 15,030,000 (2) $ 20,030,000 (3) $ 25,030,000 (3) $ 100,030,000 (7) $ 125,030,000 (10) $0 (9) $ 35,030,000 (4) Instead of a 5% preferred rate, assume there is an 8% preferred rate with a 100% catch-up. Required: a. Recalculate the yearly cash flows. b. What is the IRR to the endowment, net of fees? Start-up Name SPE Incorporated NiteID Corporation D-Ton Incorporated IKL Limited H&L Innovations SimLife Technologies Complete this question by entering your answers in the tabs below. Required A Recalculate the yearly cash flows. Note: Negative amounts should be indicated by a minus sign. Year Net Cash Flows 1 W|N 2 Harvested (Year Harvested) $ 62,164,400 (7) $ 300,030,000 (9) $0 (8) Required B 3 4 5 6 7 8 9 10
Transcribed Image Text:An endowment invests $150,180,000 in WeGrow II, an early-stage venture fund with a 20% incentive fee and a 5% preferred return [hurdle rate]. The fund invests in the following companies (for simplicity, ignore staged financing and management fees; assume instead that all investments occur at the end of their denoted year): Investment (Year Invested) $ 35,030,000 (2) $ 20,030,000 (2) $ 15,030,000 (2) $ 20,030,000 (3) $ 25,030,000 (3) $ 100,030,000 (7) $ 125,030,000 (10) $0 (9) $ 35,030,000 (4) Instead of a 5% preferred rate, assume there is an 8% preferred rate with a 100% catch-up. Required: a. Recalculate the yearly cash flows. b. What is the IRR to the endowment, net of fees? Start-up Name SPE Incorporated NiteID Corporation D-Ton Incorporated IKL Limited H&L Innovations SimLife Technologies Complete this question by entering your answers in the tabs below. Required A Recalculate the yearly cash flows. Note: Negative amounts should be indicated by a minus sign. Year Net Cash Flows 1 W|N 2 Harvested (Year Harvested) $ 62,164,400 (7) $ 300,030,000 (9) $0 (8) Required B 3 4 5 6 7 8 9 10
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