A high water mark of $150 million was established two years ago for a British hedge...

 

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A high water mark of $150 million was established two years ago for a British hedge fund. This year's end-of-year value before fees is $155 million. The fund charges "2% (management fee) and 20% (Incentive fee)." Management fees are paid independently of incentive fees and are calculated on end-of-year values. Incentive fees are calculated based on end-of-year value in excess of the previous high-water mark. What is the total fee paid this year? 13. Sequoia Venture Capital estimates that investing $6 million in a project can return $65 million at the end of six years if it succeeds; however, it realizes that the project may fail at any time between now and the end of six years. The following table has the estimates of the probabilities of failure for the project. Sequoia is considering an equity investment in the project, and its cost of equity for a project with this level of risk is 17%. Compute the expected net present value of the venture capital project. A high water mark of $150 million was established two years ago for a British hedge fund. This year's end-of-year value before fees is $155 million. The fund charges "2% (management fee) and 20% (Incentive fee)." Management fees are paid independently of incentive fees and are calculated on end-of-year values. Incentive fees are calculated based on end-of-year value in excess of the previous high-water mark. What is the total fee paid this year? 13. Sequoia Venture Capital estimates that investing $6 million in a project can return $65 million at the end of six years if it succeeds; however, it realizes that the project may fail at any time between now and the end of six years. The following table has the estimates of the probabilities of failure for the project. Sequoia is considering an equity investment in the project, and its cost of equity for a project with this level of risk is 17%. Compute the expected net present value of the venture capital project.

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1calculate the total fee paid this year for the hedge fund First we need to determine if the endofye... View the full answer