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Loaded-Up Fund charges a 12b-1 fee of 1% and maintains an expense ratio of 0.60%. Economy...

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:

Solutions

Expert Solution

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

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