You deposit $10 000 today in a fund that earns interest at j₁ = 4.5%.However,at the end of every year,an expense charge of 0.50% of the accumulated amount of the fund is withdrawn.How much do you have at the end of 3-years?

Question

Quizplus · Accepted Answer

The correct answer is A because the accumulated amount after 3 years is $11,241.34. The expense charge of 0.50% is deducted from the accumulated amount at the end of each year, so the amount available at the end of 3 years is $10,000 * (1 + 0.045)^3 * (1 - 0.005)^3 = $11,241.34.

You Deposit $10 000 Today in a Fund That Earns