Vanguard invests $65.75 billion in each of Porsche Hedge Fund and Ford Hedge Fund. Vanguard has 1 and 20 fee structure and its management fees and incentive fees are calculated independently at the end of each year. After one year, the investment in Porsche Hedge Fund is valued at $85.45 billion and the investment in Ford Hedge Fund is valued at $91.75 billion. The annual return to an investor in Vanguard is closest to

1. 16.76%.

2. 20.15%.

3. 26.45%.

4. 31.37%.