1.A manager of a private equity fund raised $100 million in committed capital. The fees are set at 2 and 20.To date, only $40 million of the raised capital has been called and invested in start-ups. Calculate the annual management fee that the manager is collecting. Although the 2 and 20 fee structure is already under significant threat from competition, private equity funds may also come under pressure from investors to revisit fee structures during the Covid 19 crisis.While the levels may change, the concept of a flat fee and a performance fee is the basis of hedge fund fee structures.Using examples, discuss why the fees are set in this way, the advantages, disadvantages and the impact of volatility?Your answer should include a discussion of the structure and purpose venture capital firms and detail their target investments and exit strategies.