1. You invested $1,250,000 with a market-neutral hedge fund manager. The fee structure is 2/20, and the fund has a high-water mark provision. Suppose the first year the fund manager loses 5 percent, the second year she gains 13 percent, and the third year she gains 7 percent. Assume management fees are paid at the beginning of each year and performance fees are taken at the end of each year.

What are the management and performance fees paid each year?