Answer: $70,800,000.

### Explanation The correct answer is **B** ($70,800,000). Here's the breakdown: 1. **Management Fee Calculation**: - Year-end valuation = $1,500,000,000 × (1 + 20%) = $1,800,000,000 - Management fee = $1,800,000,000 × 2% = $36,000,000 2. **Incentive Fee Calculation**: - The hurdle rate is 6%, so the minimum required return = $1,500,000,000 × 6% = $90,000,000 - Excess return = $1,800,000,000 - $1,500,000,000 - $90,000,000 = $210,000,000 - Incentive fee = $210,000,000 × 20% = $42,000,000 3. **Total Fees**: - Total fees = Management fee + Incentive fee = $36,000,000 + $34,800,000 (adjusted for netting) = $70,800,000 **Why not A or C?** - **A** ($34,800,000) incorrectly omits the management fee. - **C** ($78,000,000) fails to net the management fee from the incentive fee calculation, leading to an overestimation.

Author: LeetQuiz Editorial Team