You are considering investing $50,000 in two mutual funds.The first fund is a load fund with a fee of 6% and you expect the fund to earn 11% over the next year.Alternatively,you could invest in a no load fund that is expected to earn 8% and has a 0.5 percent redemption fee.What fund has a higher return and how much more value will it have after the first year?

Question

Quizplus · Accepted Answer

Laad Funt: $\quad \$ 50,000 ( 1.00 - 0.06 ) ( 1.11 ) = \$ 52,170$
Na-Laad Fund: $\quad \$ 50,000 ( 1.08 ) ( 1.00 - .005 ) = \$ 53,730$ No-Load Fund is preferred.The value difference is $53,730 - $52,170 = $1,560

You Are Considering Investing $50,000 in Two Mutual Funds