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5) Consider the following four investments? a) Yo...

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5) Consider the following four investments? a) You invest $3000 annually in a mutual fund that earns 10% annually and you reinvest all distribution. How much will you have in the account at the end of 20 years b) You invest #3000 annually in a mutual fund with 5% load fee so that only $2850 is actually invested in the fund. The fund earns 10% annually and you reinvest all distributions. How much will you have in the account at the end of 20 years? c) You invest $3000 annually in a no load mutual fund that charges 12b-1 fees of 1 percent. The fund earns 10% annually before fees, and you reinvest all distributions. How much will you have in the account at the end of 20 year? in each case you invest the same mount ($3000) every year,the fund earns the same return each year(10%) and you make each investment for the same time period(20 years) at the end of 20 years you withdraw the fund.why is the final amount in each mutual fund different?

 

Paper#7165 | Written in 18-Jul-2015

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