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Memphic Memphic
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6 years ago
The amount of fee income that Galt's fund will generate is closest to:
A) $3.75 million
B) $8.00 million
C) $10.00 million
D) $25.00 million
Textbook 
Corporate Finance: The Core

Corporate Finance: The Core


Edition: 4th
Authors:
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wrote...
6 years ago
C
Explanation:  C) At equilibrium, alpha must equal zero.  Therefore:
α = 0 = $500 × 2% - $X × 0.80%
   → $10 = 0.0080X → $X = $1250 million under management
Total fees = 1250 million × 0.0080 = $10 million
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