Question

ted has been dollar cost averaging in a mutual fund by investing $1500 at the beginning...

ted has been dollar cost averaging in a mutual fund by investing $1500 at the beginning of everg quarter for the past 5 years. he has been earning an average annual compound return of 9% compiunded quarterly on this investment. how much is the fund worth today?
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Answer #1

Formula sheet

A B C D E F G H
2
3 Calculation of Present Value of the fund:
4
5 Amount Deposited Each Quarter 1500
6 Number of Quarters(n) =5*4 years
7 Quarterly Interest rate (i) =9%/4
8
9 Present value of annuity =Annuity Amount*Present Value factor of annuity
10 =$1500*(P/A,2.25%,20)
11
12 (P/A,2.25%,20) =PV(D7,D6,-1,0) =PV(D7,D6,-1,0)
13
14 Present value of annuity =$1500*(P/A,2.25%,20)
15 =$1500*15.96
16 =D12*D5 =D12*D5
17
18 Hence Present Value of the fund is =D16
19
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