The API Fund Currently Has Assets Under Management of $450

question 45

Multiple Choice

The API Fund currently has assets under management of $450 million. If the company uses a 2/20 fee structure, what is the yearly management fee?

• A)$140,000
• B)$1,400,000
• C)$1,440,000
• D)$14,000,000
• E)$14,400,000

---

Definitions:

Indirect Method

A method of preparing a statement of cash flows in which net income is adjusted for items that do not affect cash, to determine net cash provided by operating activities.

Accounts Receivable

Amounts owed to a business by its customers for goods or services that have been delivered or used but not yet paid for.

Net Income

The total earnings of a company after all expenses and taxes have been deducted from revenues.

Statement of Cash Flows

A financial report that provides aggregate data regarding all cash inflows a company receives from its ongoing operations and external investment sources, as well as all cash outflows that pay for business activities and investments during a given period.