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

question 50

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 investments made by Galt Ventures is closest to:

• A)9.9%.
• B)12.4%.
• C)14.9%.
• D)15.8%.

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Definitions:

Cultural Capital

Non-financial social assets that promote social mobility beyond economic means, such as education, intellect, style of speech, and dress.

Cultural Literacy

The ability to understand and participate fluently in a given culture, including knowledge of history, significant figures, and pivotal events.

Counterculture

A culture, especially among the young, that rejects the dominant societal norms and values, often manifesting in alternative lifestyles and political viewpoints.

Social Control

A mechanism, typically involving laws, norms, and norms enforcement, used by society to regulate individual and group behavior, maintaining social order.