Question

Sarah invested 12000 in a unit trust 5 years ago, the value of the unit trust has increased by 7% per annum for the last 3 years. before this the price had decreased by 3% per annumCalculate the current price of the unit trust

Answer 1

The Answer to this question is

Value fund is $13831.72

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Answer 2

The value of the fund today is $13831.72

Step-by-step explanation:

Let us calculate the value at the end of each year, step by step. An annual decrease of 3% corresponds to a multiplier 1.0-0.03 = 0.97. An increase of 7% corresponds to 1.07.

Value at the end of

year 1: 12000 * 0.97

year 2: 12000 * 0.97 * 0.97

year 3: 12000 * 0.97 * 0.97 * 1.07

year 4: 12000 * 0.97 * 0.97 * 1.07 * 1.07

year 5: 12000 * 0.97 * 0.97 * 1.07 * 1.07 * 1.07 = 13831.72

The value of the fund today (end of year 5) is $13831.72