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A closed - end, commingled opportunity fund is being created with an expected three - year life. It expects to acquire properties that it expects
A closedend, commingled opportunity fund is being created with an expected threeyear life. It expects to acquire
properties that it expects to turnaround and sell at the end of three years for a gain. It also plans a minimum target return
of percent to investors, which will be based on cash distributions from operations and from the sale of properties at the
end of the life of the fund. The opportunity fund manager expects to receive a promote equal to percent of cash flows
remaining after sale of the assets and after equity investors receive their minimum percent target return. Cash flows
are expected as follows:
Required:
a What must be the cash flows to equity investors at the end of year in order to achieve their total target percent
return on equity investment?
b How much of the proceeds from property sales must the fund manager receive in order to earn its percent
promote?
c After the equity investors earn their percent target return IRR and the fund manager earns the percent promote,
how much will be distributed to equity investors?
Answer is not complete.
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Required B
How much of the proceeds from property sales must the fund manager receive in order to earn its percent promote? Do
not round intermediate calculations. Round your final answer to nearest whole dollar amount.
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