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Use the Following Information to Answer the Question(s) Below

question 48

Multiple Choice

Use the following information to answer the question(s) below.

Suppose that Galt Ventures, a venture capital firm, raised $250 million of committed capital. Each year over the 10-year life of the fund, 2% of this committed capital will be used to pay Galt's management fee. As is typical in the venture capital industry, Galt will only invest $200 million (committed capital less lifetime management fees) . At the end of 10 years, the investments made by the fund are worth $800 million. Galt also charges 20% carried interest on the profits of the fund (net of management fees) . Assume that Galt collects the $250 million of committed capital and invests $200 million of it immediately. Also assume that Galt collects all proceeds from its investments at the end of the ten-year life.

-The IRR on the investment of a limited partner into Galt Ventures net of all management fees and expenses is closest to:

Definitions:

Undeclared War

Military conflict that occurs without an official declaration of war by one or more of the involved parties.

Contradiction

A conflict or inconsistency between statements, beliefs, or ideas, where two or more propositions cannot simultaneously be true in the same context.

Petitioned

The action of formally requesting something from an authority or public body, usually through a written document signed by multiple people.

Institution of Slavery

A social and economic system where individuals are owned by others, denied freedom, and forced to work without wages.