Question
Answer the following two parts: a. Suppose that a $200M VCPE fund has a management fee of 2.5% per year for the first five years,
Answer the following two parts:
a. Suppose that a $200M VCPE fund has a management fee of 2.5% per year for the first five years, with a reduction of 0.25% in each year thereafter. All fees are paid on committed capital, and the fund has a 10-year life. What are the lifetime fees and the investment capital for this fund? (10 Points)
b. Expansion Co.'s current year's free cash flow is $10 million. It is projected to grow at 20% per year for the next 3 years. It is expected to grow at a modest 4% beyond the third year. The firm estimates its cost of capital is 12% and has no debt. Estimate the firm's current market value. (10 Points)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started