In: Finance

# You have found a mutual fund that you would like to invest in that will earn...

You have found a mutual fund that you would like to invest in that will earn 5% annually. If you invest $1000 each year for the next 10 years, how much will you have at the end of those 10 years, approximately? $18,753 $10,000$12,578 $1,628 ## Solutions ##### Expert Solution Solution: The formula for calculating the Future value of periodic investments at the end of n years is = P * [ [ ( 1 + r ) n- 1 ] / r ] Where P = Periodic Deposit i.e., Fixed amount of Annual deposit r = rate of interest earned annually ; n = no. of years A per the information given in the question we have P =$ 1,000   ; r = 5 % = 0.05 ;   n = 10

Applying the above values in the formula we have:

= $1000 * [ [ ( 1 + 0.05 ) 10 - 1 ] / 0.05 ] =$ 1000 * [ [ ( 1.05 ) 10   - 1 ] / 0.05 ]

= $1000 * [ [ 1.6289 – 1 ] / 0.05 ] =$ 1000 * [ 0.6289 / 0.05 ]

= $1000 * 12.5780 =$ 12,578

If you had $5,000 to invest, would you rather put your money in a mutual fund, an index fund, or an exchange traded fund (ETF)? Carefully explain the pros and cons of each indirect finance method. ##### 1.) If you invest$15,000 today what interest rate would you have to earn to have...
1.) If you invest $15,000 today what interest rate would you have to earn to have$57,000 in 18 years? ENTER YOUR ANSWER AS A PERCENTAGE WITH ONE DECIMAL PLACE (e.g., 12.1) AND NOT AS A DECIMAL (e.g., 0.121). ROUND TO THE NEAREST TENTH OF A PERCENT. DO NOT USE THE PERCENT SIGN (%) IN YOUR ANSWER. 2.) If you invest $16,000 today, how long would it take until you have$61,000 if you have an interest rate of 16%?...
##### You do not need a lot of money to invest in a mutual fund. However, if...
You do not need a lot of money to invest in a mutual fund. However, if you decide to put some money into an investment, you are usually advised to leave it in for (at least) several years. Why? Because good years tend to cancel out bad years, giving you a better overall return with less risk. To see what we mean, let's use a 3-year moving average on the Calvert Social Balanced Fund (a socially responsible fund). Year 1...
##### Benjamin, a software engineer, would like to invest in an attractive fund sold by a bank....
Benjamin, a software engineer, would like to invest in an attractive fund sold by a bank. The fund is to buy the stock of Big Bang Company. It is assumed that the fund can pay dividend steadily for the coming 10 years, which will generate an equivalent return of 5% annually, and the bank charge is negligible. He is thinking of investing (\$10,000 + 100 D8) at the end of each month in this fund for the purpose of using...