Question

You have $12,500 to invest and you are considering investing in fund x. the fund charges a front-end load of 3 percent and an annual expense fee of 2.25 percent of the ending asset value over the year. you believe the fund's gross rate of return will be 8 percent per year. if you make the investment, what should your investment be worth in one year?

Answer 1

Answer: $12800.36
Explanation:
Investment amount = 12,500*(1-0.03) = 12,125
Future vaue in one year,FV1 is 12,125*1.08 = 13,095.00
After expenses we get, 13,095.00*(1-0.0225) = 12,800.36