a.
To determine:
Total amount invested at the end of four years.
Introduction: Total amount invested is the amount of total investment during given period of time.
Answer to Problem 14FPP
Solution:
Total amount invested during last four years is $12,000.
Explanation of Solution
Given,
Amount invested in 2010 is $3,000.
Amount invested in 2011 is $3,000.
Amount invested in 2012 is $3,000.
Amount invested in 2013 is $3,000.
Formula to calculate total amount invested is as follows:
Substitute $3000 for the amount invested in 2010, $3000 for the amount invested in 2011, $3000 for the amount invested in 2012, $3000 for the amount invested in 2013.
b.
To determine:
Total number of mutual fund shares purchased.
Introduction: Professionally controlled investment scheme run by asset management company that bring group of people together to invest in securities, stocks and bonds is known as mutual funds.
Answer to Problem 14FPP
Solution:
Total number of mutual fund shares purchased is $273.10.
Explanation of Solution
given,
Amount invested in 2010 is $3,000.
Amount invested in 2011 is $3,000.
Amount invested in 2012 is $3,000.
Amount invested in 2013 is $3,000.
Price per share in 2010 is $40 per share.
Price per share in 2011 is $45 per share.
Price per share in 2012 is $42 per share.
Price per share in 2013 is $50 per share.
Formula to calculate total number of mutual fund shares purchased is as follows:
Substitute 75 for number of shares purchased in 2010, 66.67 for number of shares purchased in 2011, 71.43 for number of shares purchased in 2012, 60 for number of shares purchased in 2013 (calculated in working note).
Working Note:
Formula to calculate number of shares in 2010 is as follows:
Substitute $3,000 for amount invested and $40 for price per share.
Formula to calculate number of shares in 2011 is as follows:
Substitute $3,000 for amount invested and $45 for price per share.
Formula to calculate number of shares in 2012 is as follows:
Substitute $3,000 for amount invested and $42 for price per share.
Formula to calculate number of shares in 2013 is as follows:
Substitute $3,000 for amount invested and $50 for price per share.
c.
To determine:
The average cost for each mutual fund share at the end of four years.Introduction: Total amount invested is the amount of total investment during given period of time.
Answer to Problem 14FPP
Solution:
The average cost of each mutual fund share is $43.94.
Explanation of Solution
Given,
Total amount invested is $12,000 (calculated in part a)
Total number of shares purchased is 273.10 (calculated in part b).
Formula to calculate average cost of each mutual fund is as follows:
Substitute $12,000 for total investment and 273.10 for total number of shares purchased in the above formula,
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Chapter 16 Solutions
PERSONAL FINANCE >LL< W CONNECT
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