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- An endowment invests $150,180,000 in WeGrow II, an early-stage venture fund with a 20% incentive fee and a 5% preferred return [hurdle rate]. The fund invests in the following companies (for simplicity, ignore staged financing and management fees; assume instead that all investments occur at the end of their denoted year): Investment (Year Invested) $ 35,030,000 (2) $ 20,030,000 (2) $ 15,030,000 (2) $ 20,030,000 (3) $ 25,030,000 (3) $ 100,030,000 (7) $ 125,030,000 (10) $0 (9) $ 35,030,000 (4) Instead of a 5% preferred rate, assume there is an 8% preferred rate with a 100% catch-up. Required: a. Recalculate the yearly cash flows. b. What is the IRR to the endowment, net of fees? Start-up Name SPE Incorporated NiteID Corporation D-Ton Incorporated IKL Limited H&L Innovations SimLife Technologies Complete this question by entering your answers in the tabs below. Required A Recalculate the yearly cash flows. Note: Negative amounts should be indicated by a minus sign. Year Net Cash Flows 1…Suppose a PE/VC fund has $283 million in capital and the fund is looking to take advantage of current market conditions by making a large purchase for $75million. OU's endowment fund is a limited partner (LP) with a capital commitment of $18 million. The PE/VC fund issues a capital call. How much capital will the endowment fund be asked to provide? The answer should be given in $millions with 2 decimals. For example, $100.52 is $100.52 million.The file MutualFunds contains a data set with information for 45 mutual funds that are part of the Morningstar Funds 500. The data set includes the following five variables: Fund Type: The type of fund, labeled DE (Domestic Equity), IE (International Equity), and FI (Fixed Income) Net Asset Value (): The closing price per share Five-Year Average Return (%): The average annual return for the fund over the past five years Expense Ratio (%): The percentage of assets deducted each fiscal year for fund expenses Morningstar Rank: The risk adjusted star rating for each fund; Morningstar ranks go from a low of 1 Star to a high of 5 Stars. a. Prepare a PivotTable that gives the frequency count of the data by Fund Type (rows) and the five-year average annual return (columns). Use classes of 09.99, 1019.99, 2029.99, 3039.99, 4049.99, and 5059.99 for the Five-Year Average Return (%). b. What conclusions can you draw about the fund type and the average return over the past five years?
- A private equity fund is considering an acquisition. Using the data below, calculate the maximum amount of equity the fund would be willing to invest at entry, if the minimum IRR required by the fund is 20.0%. Enter your answer as a positive number, rounded to 1 decimal place, e.g. 1000.0 Exit year assumption LTM EBITDA Forecast EBITDA in exit year Exit multiple Debt/EBITDA at exit Answer: 5 years 400.0 750.0 7.0x 3.0x(a) What is a limited partnership agreement (LPA)? (b) There is a compensation rule in the LPA called carried interests. Please explain this rule. What is the purpose of the rule? There are two LBO funds set up for ten years with $1 billion committed capital each. Fund A has the following characteristics: A constant management fee of 2% and carried interest of 80-20. Fund B is as follows: Preferred return of 8% per year. A decreasing management fee (2% in the first 4 years, 1% for the rest) and carried interest of 70-30. (c) What is the investment capital of fund A and B, respectively? (d) Suppose all investment capitals are invested at t=0 and both funds have the same internal rate of return (per year) of 12% on investment capital. The LP maximizes payoff in year 10. Which fund is better for the LP and how much more can the LP get by choosing the better fund? (e) What is the total payoff (including all fees) for the GP of fund A and B, respectively?A VC firm is considering two different structures for its new $250M fund. Both structures would have management fees of 2 percent per year (on committed capital) for all 10 years. Under Structure I, the fund would receive a 25 percent carry with a basis of all committed capital. Under Structure II, the fund would receive a 20 percent carry with a basis of all investment capital. For a given amount of (total) exit proceeds $Z, solve for the amount of carried interest under both structures.
- If a Venture Capital fund with $10 million committed capital, charges 2.5% management fee per year for 10 years, and 20 percent (20%) carried interest with a basis of committed capital. If the fund earns a 2 times return on its investment. What is the IRR for Limited Partners if General Partners need to return committed capital before sharing the profit?The mutual funds Division has allocated $5.0M and is currently looking for investment opportunities to invest these funds, The financial analyst suggested that all new investments be made in the oil industry, steel industry or in government bonds. The analyst identified five investment opportunities:two from the oil industry, two from the steel and government bonds. Types of opportunities ReturnsABC oil 0.095XYZ oil 0.085Mona Steel 0.04TNT steel 0.05Government Bonds 0.015 OECS Bank has both a loans division and mutual funds division. It has allocated $40.0M to finance its loan portfolio. Its operations manager is asked to build an LP model to help guide company decisions as to how to disburse the revolving fund across different loan categories. The operations manager garnered the following data on available types of loans based on market research of the industry: Types of Loan Interest Rate Bad Debt RatioPersonal…20)Corporate fund started the year with a net asset value of GHS12.25. By year-end, its NAV equaled GHS12.10. The fund paid year-end distributions of income and capital gains of GHS1.50. What was the (pretax) rate of return to an investor in the fund?
- Louis Hall read in the paper that Fidelity Growth Fund has an NAV of $13.94. He called Fidelity and asked how the NA Fidelity gave him the following information: Current market value of fund investment Current liabilities Number of shares outstanding Did Fidelity provide Louis with the correct information? O Yes O No $8,780,000 $ 975,000 560,000Suppose that you initially invested $10,000 in the Stivers mutual fund and $5,000 in theTrippi mutual fund. The value of each investment at the end of each subsequent year isprovided in the table:Year Stivers ($) Trippi ($)1 11,000 5,6002 12,000 6,3003 13,000 6,9004 14,000 7,6005 15,000 8,5006 16,000 9,2007 17,000 9,9008 18,000 10,600Which of the two mutual funds performed better over this time period?A VC with $100 million committed capital is structured as 2% fees and 20% carry on the basis of committed capital. The first exit of a portfolio company with the VC’s investment of $10 million has happened with $50 million in the 5th year from the vintage year of the VC fund. How would this $50 million be divided between GPs and LPs in a deal-by-deal carry structure?