Question

Suppose an individual invests $5,000 in a load mutual fund for two years. The load fee entails an up-front commission charge of 2 percent of the amount invested and is deducted from the original funds invested. In addition, annual fund operating expenses (or 12b-1 fees) are 0.75 percent. The annual fees are charged on the average net asset value invested in the fund and are recorded at the end of each year. Investments in the fund return 8 percent each year paid on the last day of the year. If the investor reinvests the annual returns paid on the investment, calculate the annual return on the mutual fund over the two-year investment period. (Do not round intermediate calculations. Round your answer to 3 decimal places. (e.g., 32.161))

Answer 1

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- 2x ACO 342 PE EPS, STOCK DIVIDEND - Microsoft Excel (Product Activation Failed) File Home Insert Page Layout Formulas Data Review View Add-Ins % Cut Σ AutoSum : A Calibri 11AA = = = Dr Wrap Text General Ea Copy Fill Paste BIU - D A Merge & Center - $ % , :.: Conditional Format Cell Insert Delete Format Format Painter Sort & Find & Formatting as Table Styles 2 Clear Filter Select Clipboard Font Alignment Number Styles Cells Editing AH337 Fax AB AC AD AE AF AG AH AI AJ AK AL AM AN 336 337 INVESTMENT 5000 338 FRONT LOAD 2.00% 339 RETURN 8% 340 12b-1 FEE 0.75% 341 investment in the beginning of the year = 5000.00 343 less : front load 100.00 (5000 X 2%] 344 net investment = 4900.00 345 value of investment after a year = 5292.00 [4900*(1+0.08)] 347 less : operating expenses on average assets 38.22 [(4900 + 5292)/2 * 0.75%] 348 net investment for year 2 = 5253.78 349 value of investment at the end of year 2 = 5674.08 (5253.78 X (1+0.08)] 351 less : operating expenses on average assets 40.98 [(5253.78 +5674.08)/2*0.75%] net value of investment at the end of year 2 = 5633.10 353 354 answer annual return = (5633.10/5000)^(1/2) - 1 = 6.142% 355 356 H HIGH LOW TARGET PRICE STOCK DIV NAV HEDGE FUND ME EV PE EPS DIV ABNORMAL deberk MARGIN MONEY marginal tax PB ROPI APV ROSS price quote EVA MVAICI Rea ferences B0 120% . B 9 * 10 ENG 346 350 352 0 + 30-11-2019