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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Question
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Transcribed Image Text:Required A Required B
What is the IRR to the endowment, net of fees?
Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
IRR
%
![An endowment invests $151,020,000 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):
Start-up Name
SPE Incorporated
NiteID Corporation
D-Ton Incorporated
IKL Limited
H&L Innovations
SimLife Technologies
Investment (Year
Invested)
$ 35,170,000 (2)
$ 20,170,000 (2)
$ 15,170,000 (2)
$ 20,170,000 (3)
$ 25,170,000 (3)
$ 35,170,000 (4)
Required:
a. Construct a set of yearly cash flows to WeGrow II and to the endowment
b. What is the IRR to the endowment, net of fees?
Required A
Complete this question by entering your answers in the tabs below.
Harvested (Year
Harvested)
$ 62,170,000 (7)
$ 300,170,000 (9)
$0 (8)
$ 100,170,000 (7)
$ 125,170,000 (10)
$0 (9)
Required B
4
5
6
7
8
9
10
Construct a set of yearly cash flows to WeGrow II and to the endowment.
Note: Negative amounts should be indicated by a minus sign.
Year Net Cash Flows
1
2
3
D](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fbdec48aa-2889-4c0d-81a8-e48e919b4861%2F282ada46-b5a4-44e3-b1db-c345bfb36f37%2Fftgkx8_processed.jpeg&w=3840&q=75)
Transcribed Image Text:An endowment invests $151,020,000 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):
Start-up Name
SPE Incorporated
NiteID Corporation
D-Ton Incorporated
IKL Limited
H&L Innovations
SimLife Technologies
Investment (Year
Invested)
$ 35,170,000 (2)
$ 20,170,000 (2)
$ 15,170,000 (2)
$ 20,170,000 (3)
$ 25,170,000 (3)
$ 35,170,000 (4)
Required:
a. Construct a set of yearly cash flows to WeGrow II and to the endowment
b. What is the IRR to the endowment, net of fees?
Required A
Complete this question by entering your answers in the tabs below.
Harvested (Year
Harvested)
$ 62,170,000 (7)
$ 300,170,000 (9)
$0 (8)
$ 100,170,000 (7)
$ 125,170,000 (10)
$0 (9)
Required B
4
5
6
7
8
9
10
Construct a set of yearly cash flows to WeGrow II and to the endowment.
Note: Negative amounts should be indicated by a minus sign.
Year Net Cash Flows
1
2
3
D
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