Answer Happy

[2] Acme Ventures LLC is considering 2 different structures for its new AV II fund of $100 million with a lifetime of 10 years. The firm is going to adhere to the industry standard of 2% management fees per year on committed capital and a 25% carry on the basis of committed capital in Structure 1, and 20% on investment capital basis in Structure 2. As part of the planning process, the firm assumes the exit proceeds at the end of the fund's lifetime to be $150 million, and the managing partner wants to know: (a) What would be the carried interest earned under each of these 2 structures? (b) If these numbers are different, what would be the amount of exit proceeds that will produce the same carry in both structures?