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QUESTION THREE (40 MARKS) Larry (LP) invests $100,000 in a VC fund run by Gary (GP). Gary is under 2/20 compensation plan. Interest does not
QUESTION THREE (40 MARKS)
- Larry (LP) invests $100,000 in a VC fund run by Gary (GP). Gary is under 2/20 compensation plan. Interest does not accrue on the dividends. Gary invests $100,000 in a firm run by Edwin (Entrepreneur). The pre-money value of Edwins firm is $400,000. In five years, the firm sells for $4,000,000. Each part below is worth 5 marks. Answer the following:
- What is the payoff to Edwin the Entrepreneur?
- What is the payoff to Gary the General Partner?
- What is the payoff to Larry the Limited Partner?
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Money, Banking And Financial Markets
Authors: Stephen G. Cecchetti, Kermit L. Schoenholtz
3rd Global Edition
1259071197, 9781259071195
