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The XYZ fund has asset under management of $50 Million and an expected return of...

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Finance

The XYZ fund has asset under management of $50 Million and an expected return of 8%. Assume that required return (discount rate) for valuing fee income is also 8%.

If asset are expected to be withdrawn at a rate of 5% per year (i.e., at the end of each year, after the fee has been paid, 5% of the remaining assets are withdrawn from the fund) what are the present values of the infinite streams of fee income at annual fees of 1% and 0.5%?

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