You have $6,800 to invest. The mutual fund you are considering offers two classes of shares....

 

Transcribed Image Text:

You have $6,800 to invest. The mutual fund you are considering offers two classes of shares. Class A shares have no front-end load, an expense ratio of 3.8%, and an expected gross return of 8.6% per year. Class B shares have a front-end load of 7.3%, an expense ratio of 1.2%, and an expected gross return of 7.2% per year. a. Complete the table below. (Round your answers to 2 decimal places.) Initial investment Value after 4 years Value after 8 years (Click to select) Class A b. Which of the classes you would prefer if you plan to hold the shares for four years? Class B (Click to select) c. Which would you prefer if you plan to hold them for eight years? You have $6,800 to invest. The mutual fund you are considering offers two classes of shares. Class A shares have no front-end load, an expense ratio of 3.8%, and an expected gross return of 8.6% per year. Class B shares have a front-end load of 7.3%, an expense ratio of 1.2%, and an expected gross return of 7.2% per year. a. Complete the table below. (Round your answers to 2 decimal places.) Initial investment Value after 4 years Value after 8 years (Click to select) Class A b. Which of the classes you would prefer if you plan to hold the shares for four years? Class B (Click to select) c. Which would you prefer if you plan to hold them for eight years?

Answer rating: 100% (QA)

a To calculate the value after 4 and 8 years for each class of shares we can use the following formu... View the full answer