Fee structure is equal to 50% of any investment returns. Any earned fees would be offset against prior losses until those losses had been entirely recouped. Fees are billed quarterly. The JV's profits are equal to fees less the JV's expenses and are split equally between TOM and USCB.

Suppose the quarterly returns of MAB’s investment in 2008 are shown in the table below. The initial AUM is $50 million. What is the total fee charged to MAB each quarter in 2008 and what is the income received by TOM?

Quarterly return of 2008	Total Fee	Income to TOM
Q1: -2%
Q2: 1%
Q3: -1%
Q4: 4%

TOM's income. = AUM x Return x 0.5 x 0.5 where AUMt+1 = AUM, x (1 + rett+1) + flowt+1