1. Suppose a private equity fund has $100 million in committed capital and its base rate for management fees is 2%. The fund invested in 10 companies during the first 5 years and begins to exit its investments in year 6 at the rate of two exits per year until the end of year 10, when all investments have been exited. Assume the original cost basis for each investment is $10 million. Also assume that fees calculated on net invested capital are based on year-end balances. How much in lifetime management fees does the firm earn, based on each of the following two methods?

1. Constant fee % and total committed capital for the life of the fund.
2. Constant fee % with basis changing to net invested capital after year 5.