You are considering starting a hedge and will have no management fee. However, you will charge an incentive fee of 20% of profits. The fund has a high-water mark provision. Calculate your earnings (fees) for year 1, 2 and 3. The fees calculated in year 1 will have no effect on the ending value of 110 at the end of year 2. The second year fees will have no effect on value at the end of year 3 which is $130. Year 0 2 3 Values 100 120 110 130 Fee Earned (show calculation) 0