A hedge fund has the following characteristics at the beginning and end of the year:

• Beginning assets under management: $100 million
• Ending assets under management: $120 million
• Management fee: 1% of year-end assets under management
• Performance fee: 15% of the annual return above a 3% hurdle rate, calculated net of the management fee Assuming no capital contributions or withdrawals, the net annual return to the investor is closest to: