Question

Liza invests in an investment at the age of 35 and deposits 10000 in the investment...

Liza invests in an investment at the age of 35 and deposits 10000 in the investment fund. the fund is expected to earn an effective rate of 7.5% with an expense ratio of 1.5%. she will keep the deposit in the fund until age of 70 years old. determine the percentage reduction in the expected accumulated amount in the fund attributable to the expense ratio.

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #2

The first step is to find the value of the accumulated amount when Liza is 70 years old. The accumulated amount is found using future value of investment equation.

Fund expenses = 1.5 % 125688.70 = 0.015 125688.70

Fund expenses = 1885.33

Percentage reduction of accumulated amount due to expense ratio = 1885.33

answered by: anonymous
0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
At age 35, Frugal Frannie started saving $7,000 per year for retirement, with annual deposits being...
At age 35, Frugal Frannie started saving $7,000 per year for retirement, with annual deposits being made at the end of each year. Frannie invests her funds in a mutual fund that earns 7.5% per year. She plans to retire in 30 years, at age 65. How much will Frannie have in her retirement account when she retires? Round answer to nearest dollar and do not use a dollar sign Frannie assumes she will live to be 90 years old,...
The 25 year old invests $2,000 a year until the age of 65 The 35 year...
The 25 year old invests $2,000 a year until the age of 65 The 35 year old invests $2,000 a year until the age of 65 We’ll assume they both get the same rate of return on their dollar, in this example we’ll use 8%. Where will each of them be when they reach the age of 65? What is the difference in the two investment choice? Place the difference between the two $ amounts as your final answer. use...
Retirement planning Hal Thomas, a 25-year-old college graduate, wishes to retire at age 65. To supplement...
Retirement planning Hal Thomas, a 25-year-old college graduate, wishes to retire at age 65. To supplement other sources of retirement income, he can deposit $2,000 each year into a tax-deferred individual retirement arrangement (IRA). The IRA will earn a 10% return over the next 40 years. If Hal makes end-of-year $2,000 deposits into the IRA, how much will he have accumulated in 40 years when he turns 65? If Hal decides to wait until age 35 to begin making end-of-year...
a. Suppose your client is 35 years old and has already saved $150,000 for retirement. How...
a. Suppose your client is 35 years old and has already saved $150,000 for retirement. How much does your client need to contribute to a fund each month for the next 25 years (first payment at the end of this month), to reach a retirement goal of 4,000,000, if the fund is expected to earn an effective annual rate of 12%? b. Suppose your client is also very generous, and wishes to leave the entire $4,000,000 in savings to charity...
Happy​ birthday! You are 30 years old today. You want to retire at age 60. You...
Happy​ birthday! You are 30 years old today. You want to retire at age 60. You want to have ​$1,800,000 at retirement. ​ Realistically, you know that the most that you can save from your 31st birthday until your 50th is ​$5,500 per year​ (you only save on your​ birthdays!). How much do you have to save each year from your 51st to your 60th birthday in order to achieve your retirement goal if you can earn 6​% on your​...
Will rate, thank you. Part 1: A project requires an initial investment of $100,000 and is...
Will rate, thank you. Part 1: A project requires an initial investment of $100,000 and is expected to produce a cash inflow before tax of $27,500 per year for five years. Company A has substantial accumulated tax losses and is unlikely to pay taxes in the foreseeable future. Company B pays corporate taxes at a rate of 34% and can depreciate the investment for tax purposes using the five-year MACRS tax depreciation schedule. Suppose the opportunity cost of capital is...
****FOR THIS HOMEWORK ASSIGNMENT, YOU MUST SHOW ALL WORK (CALCUATIONS) AND DRAW TIME LINES. 1) Jane...
****FOR THIS HOMEWORK ASSIGNMENT, YOU MUST SHOW ALL WORK (CALCUATIONS) AND DRAW TIME LINES. 1) Jane is 25 years old and was able to save $25,000.    After doing some research, she identifies a stock called HPG Industries that has a dividend yield of 7% that has been consistent for the past 10 years. Based on this information, she decides to invest in this stock. Considering that HPG Industries pays the dividend consistently, how many years will it take for Jane...
CASE: Sharesies: NZ investment platform Everyday investment company Sharesies was launched in February 2017, after conducting...
CASE: Sharesies: NZ investment platform Everyday investment company Sharesies was launched in February 2017, after conducting research on New Zealanders’ attitudes towards investing. Prior to launching the company, the co-founders interviewed over 200 people asking them “If I gave you $50 right now, and you had to do something with it in the next 5 minutes what would you do?” Only 5 out of 200 people chose an option to save or invest the $50. More popular options were bills,...
  The following balance sheet and income statement should be used for questions #1 through #6: Kuipers,...
  The following balance sheet and income statement should be used for questions #1 through #6: Kuipers, Inc. 2001 Income Statement (OMR in millions) Net sales 9,625 Less: Cost of goods sold 5,225 Less: Depreciation 1,890 Earnings before interest and taxes 2,510 Less: Interest paid 850 Taxable income 1,660 Less: Taxes 581 Net income 1,079 Addition to retained earnings 679 Dividends paid 400 Kuipers, Inc. 12/31/00 and 12/31/01 Balance Sheet (in OMR, in millions) 2000 2001 2000 2001 Cash 1,455 260...
In 2020, Chip, an accomplished professional race car driver, is to receive a signing bonus for...
In 2020, Chip, an accomplished professional race car driver, is to receive a signing bonus for agreeing to drive for Hot-Lap International, a racing team. Hot-Lap agrees to establish a NQDC agreement with Chip to defer the bonus beyond Chip’s peak income producing years. Hot-Lap transfers the bonuses to an escrow agent, subject to the risk of forfeiture to team creditors in bankruptcy, who invests the funds in securities acting as a hedge against inflation. The bonus is deferred until...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT