Missing information:
a. −5%
b. 0
c. 5%
d. 10%
Answer:
a. only management fees = $20,000,000
b. only management fees = $20,000,000
c. only management fees = $20,000,000
d. $30,000,000 (management fees + $10 million incentive fee)
Explanation:
management fee 2%
incentive fee 20% of returns if total returns are over 5%
common fees for every situation (managers always win even if investors lose):
$1,000,000,000 x 2% = $20,000,000
a. −5%
, no incentive fee
b. 0
, no incentive fee
c. 5% , no incentive fee
d. 10%, incentive fee = (10% - 5%) x 20% x $1,000,000,000 = $10,000,000
