Explanation:
Management fee = $300 million * 2% = $6 million
Incentive fee = ($300 million - $6 million - $200 million - ($200 million * 10%)) * 20% = $14.8 million
Total fees = Management fee + Incentive fee = $6 million + $14.8 million = $20.8 million
Q.3499 A hedge fund has a beginning year value of $200 million, 2% management fee, and 20% incentive fee with a hurdle rate of 10%. The management fee is applied to the end-of-year assets under management, and the incentive fee is calculated net of the management fee. If the fund's ending value is $300 million, then what is the total fee of the hedge fund?
A
$18.8 million.
B
$20.8 million.
C
$14.8 million.
D
$6 million.
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