Tuscin Capital is a hedge fund with an initial investment capital of $100 million. In its first year, the fund earns a return of 30%. The fund charges a 2% management fee based on assets under management at the end of the year and a 20% incentive fee with a hurdle rate of 4% (applicable on the beginning capital position for the year). The ending values of the fund (before fees for the current year) for the first 3 years are given below:

• 2009 = $130 million
• 2010 = $110 million
• 2011 = $140 million

Other information:

• A high water mark provision applies.
• The incentive fee is based on returns in excess of the hurdle rate and is calculated net of management fee.

Investors effective return for 2011 is closest to:

Group of answer choices

10.35%

22.86%

25.39%