Question

Loaded-Up Fund charges a 12b-1 fee of 1% and maintains an expense ratio of 0.60%. Economy Fund charges a front-end load of 2%, but has no 12b-1 fee and an expense ratio of 0.40%. Assume the rate of return on both funds’ portfolios (before any fees) is 5% per year.


a. How much will an investment of $100 in each fund grow to after 1 year? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Loaded-up Fund:

Economy Fund:

b. How much will an investment of $100 in each fund grow to after 2 years? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Loaded-up Fund:

Economy Fund:

c. How much will an investment of $100 in each fund grow to after 11 years? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Loaded-up Fund:

Economy Fund:

Answer 1

	Loaded-up Fund	Economy Fund
Amount Invested	$           100.00	$         100.00
Less: Front-End Load	0%	2%
Net Amount Invested:	$           100.00	$           98.00
Return:	5%	5%
Less: Expense Ratio	0.6%	0.4%
Less: 12b-1	1.0%	0.0%
Net Return:	3.4%	4.6%
Values:
Year 1 (a)	$           103.40	$         102.51
Year 2 (b)	$           106.92	$         107.22
Year 11 (c)	$           144.45	$         160.72