I. Larry (LP) invests $125,000 in a VC fund run by Gary (GP). Gary is under 2/20 compensation plan. Dividends are cumulative but interest does not accrue on the dividends. Gary invests $125,000 in a firm run by Edwin (Entrepreneur). The pre- money value of Edwin's firm is $450,000. In five years, the firm sells for $4,000,000. a) What is the payoff to Edwin the Entrepreneur? b) What is the payoff to Gary the General Partner? c) What is the payoff to Larry the Limited Partner?

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