Explanation : The management fee of hedge funds is based on invested capital until the
committed capital is fully drawn down and invested. This approach is in
contrast to private equity funds, for which the management fee is based on
committed capital.
Explanation : Value of the fund at the end of year = 200 * 1.28 = 256
Management fee = $256 million * 0.03 = $7.68 million
Incentive fee = ($256 – $200) million * 0.15 = $8.4 million
Total fees to SHM Capital = $16.08 million