Loaded-Up Fund charges a 12b-1 fee of 1% and maintains an expense ratio of 0.90%

Question

Loaded-Up Fund charges a 12b-1 fee of 1% and maintains an expense ratio of 0.90%. Economy Fund charges a front-end load of 2%, but has no 12b-1 fee and an expense ratio of 0.10%. 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 9 years? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Loaded-Up Fund $ Economy Fund $

Explanation / Answer

12b-1 fee is included in expense ratio , so not calculated separately Loaded Up Fund Investment Net fund Value in the beginning Growth @5% Fund value with growth Less expense @0.9% Net Fund Value Year 1           100.00             100.00            5.00              105.00               0.945                104.055 Year 2             104.06            5.20              109.26               0.983                108.274 Year 3             108.27            5.41              113.69               1.023                112.665 Year 4             112.66            5.63              118.30               1.065                117.234 Year 5             117.23            5.86              123.10               1.108                121.987 Year 6             121.99            6.10              128.09               1.153                126.934 Year 7             126.93            6.35              133.28               1.200                132.081 Year 8             132.08            6.60              138.69               1.248                137.437 Year 9             137.44            6.87              144.31               1.299                143.010 Loaded Up Fund   Value Details Year 1 Year 2 Year 9 Value After The following years $       104.06 $         108.27 $   143.01 Economy Fund Investment Frond end Load@2% Net fund Value in the beginning Growth @5% Fund value with growth Less expense @0.1% Net Fund Value Year 1           100.00                        2          98.00                   4.90             102.90                     0.103 102.797 Year 2        102.80                   5.14             107.94                     0.108 107.829 Year 3        107.83                   5.39             113.22                     0.113 113.107 Year 4        113.11                   5.66             118.76                     0.119 118.644 Year 5        118.64                   5.93             124.58                     0.125 124.451 Year 6        124.45                   6.22             130.67                     0.131 130.543 Year 7        130.54                   6.53             137.07                     0.137 136.933 Year 8        136.93                   6.85             143.78                     0.144 143.636 Year 9        143.64                   7.18             150.82                     0.151 150.667 Loaded Up Fund   Value Details Year 1 Year 2 Year 9 Value After The following years $       102.80 $         107.83 $   150.67

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