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ACME Venture Capital Fund III is considering two different structures for its new $5B fund. Both structures would have management fees of 2 percent per
ACME Venture Capital Fund III is considering two different structures for its new $5B 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 an 20% carry with a basis of all committed capital. Under Structure II, the fund would receive a 20% 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. Which option would you prefer as a GP?
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