Answer: 16.4%

**Explanation:** 1. **Management Fee Calculation:** - Management fee = Ending AUM × 1% = $120 million × 1% = $1.2 million. 2. **Performance Fee Calculation:** - Annual return = (Ending AUM - Beginning AUM) / Beginning AUM = ($120 million - $100 million) / $100 million = 20%. - Hurdle rate = 3%. - Performance fee = (Annual return - Hurdle rate - Management fee) × 15% = (20% - 3% - 1.2%) × 15% = 15.8% × 15% = 2.37%. - Total fee = Management fee + Performance fee = 1.2% + 2.37% = 3.57%. 3. **Net Return to Investor:** - Net return = Annual return - Total fee = 20% - 3.57% = 16.43%, which rounds to **16.4%**. Option **B** is correct because it accurately reflects the net return after accounting for both the management and performance fees, including the hurdle rate.

Author: LeetQuiz Editorial Team