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Assume Cambridge Ventures raises $10,110,000 for a private equity fund with a one-year life. The fund has a hurdle rate of 4 percent, above which

Assume Cambridge Ventures raises $10,110,000 for a private equity fund with a one-year life. The fund has a hurdle rate of 4 percent, above which it earns a carried interest of 10 percent.

If Cambridge generates a return of 16 percent, what is the firm’s carried interest for the year?

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