Loaded-Up Fund charges a 12b-1 fee of 0.75% and maintains an expense ratio of 0.75%. Economy Fund charges a front-end load of 2.5%, but has no 12b-1 fee and an expense ratio of 0.25%. Assume the rate of return on both funds’ portfolios (before any fees) is 7% per year.
How much will an investment of $1,000 in each fund grow to after: (Round your answers to 2 decimal places.)
1 year? Loaded Up Fund Economy Fund
3 year? Loaded Up Fund Economy Fund
10 year? Loaded Up Fund Economy Fund
Loaded Up Fund Future Value FV (LUP) = PV x (1 + r - 12b-1 - expense)^n
Economy Fund Future Value FV (EP) = PV x (1 - load) x (1 + r - expense)^n
FV (LUP) 1 year = 1,000 x (1 + 7% - 0.75% - 0.75%)^1 = $1,055.00
FV (EP) 1 year = 1,000 x (1 - 2.5%) x (1 + 7% - 0.25%)^1 = $1,040.81
FV (LUP) 3 year = 1,000 x (1 + 7% - 0.75% - 0.75%)^3 = $1,174.24
FV (EP) 3 year = 1,000 x (1 - 2.5%) x (1 + 7% - 0.25%)^3 = $1,186.06
FV (LUP) 10 year = 1,000 x (1 + 7% - 0.75% - 0.75%)^10 = $1,708.14
FV (EP) 10 year = 1,000 x (1 - 2.5%) x (1 + 7% - 0.25%)^10 = $1,873.63
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