Dena Els works for a large private endowment that recently invested $50M into a global macro hedge fund with the following features:

- 2-and-20 fee structure

- There is no high water mark provision

- Hard hurdle rate of 5%

- Management fees are paid based on end of period assets

- Incentive fees are calculated net of management fees

The endowments investment decreased to $40M the next year and then increased to $48M, before fees, the following year. Dena wants to know how much her endowment paid in total fees during the second year?

Hint: To properly answer the question you should have an understanding of 1. Hurdle rates 2. High water marks 3. The ability to distinguish between beginning and end of period management fees and 4. The ability to distinguish between net and gross management fees.