Don't used Ai solution Suppose that a $1B VC fund has fees of 2.0% per year in all years, with these fees paid oncommitted capital in the first 5 years and on net invested capital for years 6-10. You canassume that the fund is fully invested by the beginning of Year 6, then realizes 20% of itsinvestment capital in each of the following five years. What are the lifetime fees and investmentcapital for this fund. Assumptions: committed capital = total amount of capital promised bythe LPs over a lifetime of a fund management fees = fees to keep lights oncapital = invested capital LESS cost basis of realized investments Problem 2.2.xlsx Lifetimefees = $ 150.94 Investment capital = $ 849.06 Lifetime fees = $ 145.82 Investment capital =$ 750.43 Lifetime fees = $ 175.94 Investment capital = $ 849.06 Lifetime fees = $ 175.94Investment capital = $ 750.43 Listen

Step 1: Calculating Management Fees (Years 1-5)Management fees for Years 1-5 are 2% of committed…

Answered: Suppose that a $1B VC fund has fees of…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter12: Capital Investment Analysis

Section: Chapter Questions

Problem 4CMA: Foster Manufacturing is analyzing a capital investment project that is forecast to produce the...

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A VC firm is considering two different structures for its new $250M fund. Both structures would have management fees of 2 percent per year (on committed capital) for all 10 years. Under Structure I, the fund would receive a 25 percent carry with a basis of all committed capital. Under Structure II, the fund would receive a 20 percent carry with a basis of all investment capital. For a given amount of (total) exit proceeds $Z, solve for the amount of carried interest under both structures.
please show work and formulas
Loaded-Up Fund charges a 12b-1 fee of 1% and maintains an expense ratio of 0.90%. Economy Fund charges a front-end load of 2%, but has no 12b-1 fee and has an expense ratio of 0.10%. Assume the rate of return on both funds’ portfolios (before any fees) is 5% per year. Required: a. How much will an investment of $100 in each fund grow to after 1 year? (Do not round intermediate calculations. Round your answers to 2 decimal places.) b. How much will an investment of $100 in each fund grow to after 2 years? (Do not round intermediate calculations. Round your answers to 2 decimal places.) c. How much will an investment of $100 in each fund grow to after 9 years? (Do not round intermediate calculations. Round your answers to 2 decimal places.)
Loaded-Up Fund charges a 12b-1 fee of 1% and maintains an expense ratio of 0.70%. Economy Fund charges a front-end load of 2%, but has no 12b-1 fee and has an expense ratio of 0.30%. Assume the rate of return on both funds' portfolios (before any fees) is 6% per year. Required: a. How much will an investment of $100 in each fund grow to after 1 year? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Mutual Fund Loaded-Up Fund Economy Fund Investment Values b. How much will an investment of $100 in each fund grow to after 4 years? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Mutual Fund Loaded-Up Fund Economy Fund Investment Values
Suppose that we make contributions to a fund of $125 today and $750 in twoyears for a return of $1000 in one year. First write the Net Present Value as a function of the discount factor ν. Secondly, use the NPV to calculate the yield rate of this investment (select the larger value for i. Finally, explain whether or not this is a good investment for us. Please show all work
A VC firm is considering two different structures for its new $100M fund. Both structures would have management fees of 2.5 percent per year (on committed capital) for all ten years. Under Structure I, the fund would receive a 25 percent carry with a basis of all committed capital. Under Structure II, the fund would receive a 20 percent carry with a basis of all investment capital. For what amount of exit proceeds would these two structures yield the same amount of carried interest?
A closed-end, commingled opportunity fund is being created with an expected three-year life. It expects to acquire properties that it expects to turnaround and sell at the end of three years for a gain. It also plans a minimum target return of 10 percent to investors, which will be based on cash distributions from operations and from the sale of properties at the end of the life of the fund. The opportunity fund manager expects to receive a promote equal to 25 percent of cash flows remaining after sale of the assets and after equity investors receive their minimum 10 percent target return. Cash flows are expected as follows: Equity Investment $ 2,600,000 Cash Distributions from Operations to Equity Investors (After Management Fees) $ 80,000 80,000 80,000 Expected Sale Proceeds $ 3,600,000 Year 0 Year 1 Year 2 Year 3 Required: a. What must be the cash flows to equity investors at the end of year 3 in order to achieve their total target 10 percent return on equity investment? b. How much…
Loaded-Up Fund charges a 12b-1 fee of 1% and maintains an expense ratio of 0.65%. Economy Fund charges a front-end load of 2%, but has no 12b-1 fee and has an expense ratio of 0.35%. Assume the rate of return on both funds’ portfolios (before any fees) is 7% per year. Required: How much will an investment of $100 in each fund grow to after 1 year? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Mutual Fund Investment Values Loaded Up Fund Economy Fund How much will an investment of $100 in each fund grow to after 4 years? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Mutual Fund Investment Values Loaded Up Fund Economy Fund How much will an investment of $100 in each fund grow to after 11 years? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Mutual Fund Investment Values Loaded Up Fund Economy Fund
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There are two LBO funds set up for ten years with $1 billion committed capital each. Fund A has the following characteristics: A constant management fee of 2% and carried interest of 80-20. Fund B is as follows: A decreasing management fee (2% in the first 4 years, 1% for the rest), preferred return of 8% per year, 100% catch-up, and carried interest of 70-30. 1. What is the investment capital of fund A and B, respectively? 2. Suppose all investment capitals are invested at t=0 and both funds have the same internal rate of return (per year) of 12% on investment capital. The LP maximizes payoff in year 10. Which fund is better for the LP and how much more can the LP get by choosing the better fund? 3. What is the total payoff (including all fees) for the GP of fund A and B, respectively?
Dundonald Inc. has identified an investment project with the following cash flows. If the discount rate is 8%, what is the future value of these cash flows in year 4? What is the future value at a discount rate of 11%? At 24%? Year Cash Flow 1 $1,375 2 1,495 3 1,580 4 1,630
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