The Investments Fund sells Class A shares with a front-end load of 6% and Class C shares with 12b-1 fees of 0.75% annually as well as back-end load fees that start at 5% and fall by 1% for each full year the investor holds the portfolio (until the fifth year). Assume that you have $1,000 to invest and the portfolio rate of return net of operating expenses is 11% annually. Required: a-1. If you invest in each fund and sell after 4 years, how much will you receive from each sale? a-2. Are Class A or Class C shares the better choice for you? b-1. If you invest in each fund and sell after 15 years, how much will you receive from each sale? b-2. Are Class A or Class C shares the better choice for you? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Req A1 Req A2 Req B1 Req B2 If you invest in each fund and sell after 4 years, how much will you receive from each sale? Note: Do not round intermediate calculations. Round your answers to 2 decimal places. Amounts Class A $ 1,426.99 Class C $ 1,447.91

EBK CFIN
6th Edition
ISBN:9781337671743
Author:BESLEY
Publisher:BESLEY
Chapter4: Time Value Of Money
Section: Chapter Questions
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The Investments Fund sells Class A shares with a front-end load of 6% and Class C shares with 12b-1 fees of 0.75% annually as well as
back-end load fees that start at 5% and fall by 1% for each full year the investor holds the portfolio (until the fifth year). Assume that you
have $1,000 to invest and the portfolio rate of return net of operating expenses is 11% annually.
Required:
a-1. If you invest in each fund and sell after 4 years, how much will you receive from each sale?
a-2. Are Class A or Class C shares the better choice for you?
b-1. If you invest in each fund and sell after 15 years, how much will you receive from each sale?
b-2. Are Class A or Class C shares the better choice for you?
Answer is complete but not entirely correct.
Complete this question by entering your answers in the tabs below.
Req A1
Req A2
Req B1
Req B2
If you invest in each fund and sell after 4 years, how much will you receive from each sale?
Note: Do not round intermediate calculations. Round your answers to 2 decimal places.
Amounts
Class A
$
1,426.99
Class C
$
1,447.91
Transcribed Image Text:The Investments Fund sells Class A shares with a front-end load of 6% and Class C shares with 12b-1 fees of 0.75% annually as well as back-end load fees that start at 5% and fall by 1% for each full year the investor holds the portfolio (until the fifth year). Assume that you have $1,000 to invest and the portfolio rate of return net of operating expenses is 11% annually. Required: a-1. If you invest in each fund and sell after 4 years, how much will you receive from each sale? a-2. Are Class A or Class C shares the better choice for you? b-1. If you invest in each fund and sell after 15 years, how much will you receive from each sale? b-2. Are Class A or Class C shares the better choice for you? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Req A1 Req A2 Req B1 Req B2 If you invest in each fund and sell after 4 years, how much will you receive from each sale? Note: Do not round intermediate calculations. Round your answers to 2 decimal places. Amounts Class A $ 1,426.99 Class C $ 1,447.91
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