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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?

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?

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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pls answer a b and c

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?
Transcribed Image Text: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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