What is the gp share of profits earned

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A hedge fund has been in existence for many years. The General Partner receives a fee of 2% of average assets which can be ignored for this question, and a 20% share of profits subject to a high water mark.

Problem a) In 2017, after the fund earns profit of $10,000 that calendar year, it has a cumulative profits from inception to 12/31/2017 of $100,000 and a high water mark of $120,000. What is the GP share of $10,000 profits earned in 2017?

Problem b) In 2018, the same fund makes an additional $30,000. What is the GPs share of $30,000 profit in 2018?

Reference no: EM133006934

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