On January 2, 2017, you invest $10,000 in the Dog Mutual Fund, a load fund that charges a fee of 7 percent. The fund's returns were 12.8 percent in 2017, 13.9 percent in 2018, and 7.9 percent in 2019. On December 31, 2019, you redeem all your shares. The dollar value is

Question

Quizplus · Accepted Answer

First, we need to calculate the amount of the load fee. The load fee is 7% of the initial investment of $10,000, which is $700. Therefore, the amount actually invested is $9,300 ($10,000 - $700).

To calculate the dollar value at the end of 2019, we need to use the compound interest formula:

VF = VI x (1+r)^n

Where:
VF = final value
VI = initial value
r = annual rate of return
n = number of periods

For 2017:
VF1 = $9,300 x (1+0.128) = $10,507.40

For 2018:
VF2 = $10,507.40 x (1+0.139) = $12,004.88

For 2019:
VF3 = $12,004.88 x (1+0.079) = $12,892.50

Therefore, the dollar value of the investment at the end of 2019 is $12,892.50. But we need to subtract the load fee of $700 to get the actual redemption amount, which is $12,192.50.

On January 2, 2017, You Invest $10,000 in the Dog