answer questions cde please, thankyou!

Question 3 (16 points] (a) What is a limited partnership agreement (LPA)? [2p] (b) There is a compensation rule in the LPA called carried interests. Please explain this rule. What is the purpose of the rule? [2p] 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: Preferred return of 8% per year. A decreasing management fee (2% in the first 4 years, 1% for the rest) and carried interest of 70-30. (C) What is the investment capital of fund A and B, respectively? [2p] (d) Suppose all investment capitals are invested at t=0 and both funds have the same internal rate of return (per year) of 18% 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? [6p] (e) What is the total payoff (including all fees) for the GP of fund A and B, respectively? [4p) Question 3 (16 points] (a) What is a limited partnership agreement (LPA)? [2p] (b) There is a compensation rule in the LPA called carried interests. Please explain this rule. What is the purpose of the rule? [2p] 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: Preferred return of 8% per year. A decreasing management fee (2% in the first 4 years, 1% for the rest) and carried interest of 70-30. (C) What is the investment capital of fund A and B, respectively? [2p] (d) Suppose all investment capitals are invested at t=0 and both funds have the same internal rate of return (per year) of 18% 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? [6p] (e) What is the total payoff (including all fees) for the GP of fund A and B, respectively? [4p)