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You invest in a mutual fund that charges a 4% front-end load, 2%

total annual fees, and a 3%
back-end load, which decreases 0.5% per year. How much will you pay
in fees on a $11,300
investment that do

User Dyan
by
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1 Answer

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Answer: you will pay a total of $1,017 in fees on your $11,300 investment in the mutual fund.

Step-by-step explanation:

To calculate the total fees you will pay on a $11,300 investment in the mutual fund, let's break down the fees based on the provided information:

Front-End Load: The front-end load is charged when you initially invest in the mutual fund. In this case, the front-end load is 4%. Therefore, you will pay 4% of $11,300 as a front-end load fee.

Front-End Load Fee = 4% * $11,300 = $452

Total Annual Fees: The total annual fees are charged on an ongoing basis and are typically expressed as a percentage of the total investment. In this case, the total annual fees are 2%. Therefore, you will pay 2% of $11,300 each year as annual fees.

Annual Fee = 2% * $11,300 = $226

Back-End Load: The back-end load is charged when you sell or redeem your investment in the mutual fund. The back-end load starts at 3% and decreases by 0.5% each year. Since the time period for which you hold the investment is not specified, we'll assume you hold it for a year. Therefore, the back-end load fee would be 3% in this case.

Back-End Load Fee = 3% * $11,300 = $339

Now, let's calculate the total fees you will pay:

Total Fees = Front-End Load Fee + Annual Fee + Back-End Load Fee

Total Fees = $452 + $226 + $339 = $1,017

User Ernie Thomason
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