please explain. watermark is at 112 ? so for third year incentive fee will be calculated on amount exceeding 112 ?
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My answer comes out to be 12.88%
answer is option A – 14.15%
my ans is also 12.88
ans is A
1 yr 112 * 2% = 2.24 management fee
112- 98 = 14 *20% = 2.8
total fee = 5.04
amt after fees is 106.96 this is our water mark
2 yr 100 *2% = 2 only management fee this year
amt left is 98
3 yr
116 * 2% = 2.32 management fee
INCENTIVE FEE = 116 – 106.96 = 9.04*20% = 1.808
total return this year = 116 – 2.32 – 1.808 = 111.872 / 98 = 14.1551