mitted capital. Each year over the

Suppose venture capital firm GSB partners raised $75 million of committed capital. Each year over the 9-year life of the fund, 2.0% of this committed capital will be used to pay GSB's management fee. As is typical in the venture capital industry, GSB will only invest $61.50 million (committed capital less lifetime management fees). At the end of 9 years the investments made by the fund are worth $700 million. GSB also charges 20% carried interest on the profits of the fund (net of management fees) a. Assuming the $61.50 million of invested capital is invested immediately, and all proceeds were received at the end of 9 years, what is the IRR of the investments GSB partners made? That is, compute the IRR ignoring all management fees b. Of course, as an investor, or limited partner, you are more interested in your own IRR, that is the IRR including all fees paid. Assuming that investors gave GSB partners the full $75 million up front, what is the IRR for GSB's limited partners (that is, the IRR net of all fees paid) Review Click the icon to see the Worked Solution (Formula Solution) a. Assuming the $61.50 million of invested capital is invested immediately, and all proceeds were received at the end of 9 years, what is the IRR of the investments GSB partners made? That is, compute the IRR ignoring all management fees. The IRR in this case is 96 (Round to two decimal places.) b. Of course, as an investor, or limited partner, you are more interested in your own IRR, that is the IRR including all fees paid. Assuming that investors gave GSB partners the full $75 million up front, what is the IRR for GSB's limited partners (that is, the IRR net of all fees paid). The profit for the LP will be S million. (Round to two decimal places.) The carried interest will be S million. (Round to two decimal places.) The LP payoff will be SE Round to two decimal places.) The IRR in this ca (Round to two decimal places.)