The Kramerica Hedge Fund has a 2 and 20 fee structure. There is no hurdle rate, and the funds NAV is $500 million at the beginning of the year and at the end of the year, the funds NAV is $550 million.

a. Assume that management fees are computed on beginning of the year NAVs and distributed annually. Also assume that the fund had no redemptions during the year. What is the annual management fee?

b. What is the incentive fee for the Kramerica hedge funds managers?

c. What is the Kramerica hedge funds year-end NAV after fees?

d. Assume now that the end of year NAV for the fund is $450 million. Calculate the new annual management fee, incentive fee, and ending NAV after fees for the Kramerica hedge fund.