Calculation of Net Return for Hedge Fund Investors

Consider a hedge fund that primarily invests in distressed debt securities. Over the past year, the fund reported a gross return of 18%, a management fee of 2%, and a performance fee of 20% on any profits above a predetermined benchmark return of 10%. The fund's benchmark return for the year was 10%. Calculate the net return to investors after fees.

Your task is to determine which of the following calculations accurately reflects the net return for investors in this hedge fund.