Breakeven amount of distributions

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Sunny Bird Ventures is considering two alternative carry structures for its SBV II.  Structure 1: allows for 25% carry with a basis of all committed capital. Structure 2: allows for 20% carry with a basis of all investment capital. Committed capital is $ 250 M. Management fees are 2.5% of committed capital every year of fund duration of 10 years. Suppose total cumulative distributions for 10 years is $400 M. 

a) How much carry would GP get under 1 and 2?  

b) What is the breakeven amount of distributions that makes GP indifferent between structure (1) and (2)?

Reference no: EM131360389

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