40) You are considering investing in a no-load mutual fund with an annual expense ratio of 0.60% and an annual 12b-1 fee of 0.75%. You could also invest in a bank CD paying 6.50% per year. What minimum annual rate of return must the fund earn to make you better off in the fund than in the CD? A) 7.10% B) 7.45% C) 7.25% D) 7.85%
Q: Currently AUD/USD currency pairs have a quote of 0.7197-99 in Oanda trading platform. If you follow…
A: When there is expectation that prices will go down then there is need to short sell and this gives…
Q: What is its WACC after issuing debt? [give your answer in %, with two decimal points precision]
A: First we need to determine the value of the firm with debt and then compute the weight of debt and…
Q: Over the last five years, the price of stock A has been changing as follows. What should be the…
A: Solution:Geometric rate of return means the rate of overall rate of return computed in terms of per…
Q: Carolina is 44 years of age and has $22,000 in her RRSP. She will be putting $15,500 into her plan…
A: We need to use future value of annuity formula and future value formula to calculate money at year…
Q: A treasury bill has a face value of $10000 and matures in 13 weeks. Assuming an interest rate of…
A: A treasury bill is a kind of debt security issued by the government and private companies for…
Q: Xavi sells seashore paintings. His annual Fixed Costs are $1,000 and the Variable Costs are $8 per…
A: Solution:Break- even point is the point of no profit, no loss i.e. where total expenditure equalizes…
Q: A project requires an initial investment of $100,000 and is expected to produce a cash inflow before…
A: The profitability of a project or investment is assessed using the financial statistic called net…
Q: A lawnmower manufacturer has the following loss distribution and its annual products liability…
A: A policy limit is the amount of money an insurance provider will disburse for a single claim or for…
Q: Naumann Corporation produces and sells a single product. Data concerning that product appear below:…
A: ParticularsCurrent PositionExpected PositionNumber of units1300.00=1300+500=1800.00Selling…
Q: Problem 4-18 Growth and Profit Margin [LO3] Gamgee Company wishes to maintain a growth rate of 10.4…
A: First we need to calculate ROE by using equation below.than we need to use profit margin formula…
Q: Xavi sells seashore paintings. His annual Fixed Costs are $1,000 and the Variable Costs are $8 per…
A: Solution:Break- even point is the point of no profit, no loss i.e. where total expenditure equalizes…
Q: Please provide your complete solutions to the given problems. You may use MS Excel for your…
A: Amortization is the process of gradually paying off a debt or loan through regular, scheduled…
Q: MANAGEMENT OF TECHNOLOGY Project Selection Based on Economic Analysis 0.1 = MARR' Technology "A"…
A:
Q: Given: E(R₁) 0.06 E(R₂) = 0.13 E(0₁) = 0.04 E(0₂) = 0.06 Calculate the expected returns and expected…
A: According to bartleby guidelines , if question involves multiple sub parts , then 1st sub 3 parts…
Q: Intro The annual interest rate is 4%. Part 1 What is the present value (PV) of $1,000 that you'll…
A: Solution:When amount is invested somewhere, it earns interest on it. The amount initially invested…
Q: Mary Ott is going to borrow $5,800 for 60 days and pay $159 interest. What is the effective rate of…
A: Solution:Effective rate of interest means the annual effective rate of interest after effect of all…
Q: A manufacturing firm is considering the following mutually exclusive N Project A Project B 0-$2,000…
A: The projects that are mutually exclusive then in such cases investor chooses one out of the two…
Q: Private placements are O limited to debt securities. limited to equity securities. available for…
A: Private placement- It is an alternative to Initial Public Offer or IPO. Under this system, shares or…
Q: Oberon, Inc. has a $25 million (face value) 10-year bond issue selling for 96 percent of par that…
A: The before tax cost of debt is calculated as bond YTM which can be estimated from the RATE function…
Q: Q-4: Fay borrowed $5000 at an interest rate of 3% compounded quarterly. C first, second, and third…
A: Future value of the loan must be equal to the future value of payments That is a basic criteria used…
Q: Carla Vista Unlimited is considering purchasing an additional delivery truck that will have a…
A: Payback period is that period under which investor will received his invested amount return without…
Q: Coupon Yield to maturity Maturity (years) Par Price Bond B 9% 8% Bond A 8% 8% 2 5 $100.00 $100.00…
A: Modified duration:Modified duration takes into account both the bond's coupon rate and its time to…
Q: A homeowner can obtain a $250,000, 30-year fixed-rate mortgage at a rate of 6.0 percent with zero…
A: Mortgage refers to the covered loan borrowed for the purchase or the maintenance of the property…
Q: The technique for calculating a bid price can be extended to many other types of problems. Answer…
A: NPV is most used capital budgeting method based time value of money and at is the financial break…
Q: Q4. ABC Bank would like to buy 15 million EUR today against USD. JP Morgan quotes EUR/USD as…
A: As per the internation forex standard, when the rates are quoted as A/B then is A is the buying rate…
Q: Bond A Coupon 8% Yield to maturity 8% Maturity (years) 2 Par Price Bond B 9% 8% 5 $100.00 $100.00…
A: Modified duration:Modified duration takes into account both the bond's coupon rate and its time to…
Q: Your landscaping company can lease a truck for $8,150.00 a year for 4 years. It can instead buy the…
A: The Present Value of Ordinary Annuity refers to the concept which gives out the discounted or…
Q: An insurance company is offering a new policy to its customers. Typically, the policy is bought by a…
A: Variables in the question:DescriptionPayments ($)First birthday870Second birthday870Third…
Q: magination Dragons Corporation needs to raise funds to finance a plant expansion, and t has decided…
A: Zero coupon bonds do not pay any coupon payment but par value is paid on the maturity of the bond.
Q: Suppose you are the buyer for the housewares department of a department store. A number of vendors…
A: The net price is calculated byThe trade discount is
Q: Consider the following financial information and answer the questions that follow: Sales : $250,000…
A: i)i)Calculation of net income:Sales$250,000Costs($134,000)Depreciation($10,200)Operating…
Q: Jordan was supposed to pay Courtney $4,200 6 months ago and $2,220 in 5 months. If he wants to repay…
A: The future value refers to the value of cash flows at future date. These cash flows are compounded…
Q: On October 5, Tristan Sandino borrowed $3,050 to buy an English bulldog. The loan carried a rate of…
A: Simple interest is that interest amount which is computed only on the principal amount. In contrast…
Q: the ____________ bond is more attractive for an investor in a 20% tax bracket because the muni…
A: The firm issues a corporate bond to raise funds. An investor effectively makes a loan to a…
Q: Tom Scott is the owner, president, and primary salesperson for Scott Manufacturing. Because of this,…
A: Operating cash inflows (OCF) can be referred to as the amount that will be received by an investor…
Q: Rumolt Motors has 54 million shares outstanding with a share price of $27 per share. In addition,…
A: Weighted Average Cost of Capital (WACC) is a financial metric that calculates the average cost of…
Q: Joseph is considering acquiring a couple of Ford bonds, which were initially offered with a face…
A: A bond is a debt instrument used by institutions to raise capital. Bonds can be issued by companies…
Q: E-Eyes.com has a new issue of stock it calls 20/20 preferred. The stock will pay a $20 dividend per…
A: Preferred stocks are those stocks that gives the owners of these stocks a priority claim with…
Q: Tabitha had to pay her friend $900, 4 months ago and she has to pay $630 in 4 months. If her friend…
A: The present value is the current date value of the annuity that can be determined by discounting the…
Q: Ryan Enterprises forecasts the free cash flows (in millions) shown below. Assume the firm has zero…
A: Weighted Average Cost of Capital = r = 13%Growth Rate after year 3 = g = 5%Free Cash Flow for year 1…
Q: The management of Kunkel Company is considering the purchase of a $21,000 machine that would reduce…
A: Cashflows:Cashflows refer to the movement of money into and out of a business or individual's…
Q: Question 29 B&L Industries is currently trading for $34.22 a share. Next year's dividend is expected…
A: Plowback ratio is the measure of portion of the earnings shall be retained by the company to fuel…
Q: Luther Industries needs to raise $25 million to fund a new office complex. The company plans on…
A: Price of bond is the present value of coupon payments plus the present value of par value of bond…
Q: 11. A newly issued 10-year bond with a face value of $1, 250 is trading at $1, 437.0. Its coupons…
A: Solution:Bond price means the price at which a bond should trade in the market. It is the summation…
Q: that you enter into a short futures contract to sell July silver for $27.20 per ounce. The size of…
A: Margin is amount required in broker account to keep positions and if not then will broker will call…
Q: Bustillo Incorporated is working on its cash budget for March. The budgeted beginning cash balance…
A: Businesses utilise cash budgeting, a financial planning method, to control their short-term cash…
Q: Quality Tools, Inc. needs to purchase a new machine costing $2.08 million. Management is estimating…
A: IRR is the break even rate for company and net present value is zero and required rate should be…
Q: OnTheMove Inc. has profit margin of 9%, total asset turnover of 1.5, equity multiplier of 2 and a…
A: Sustainable growth rate is the maximum growth rate that a company can sustain without having to…
Q: You have mutual funds with an effective APR of 10% and you want to be able to withdraw $3,000 from…
A: The present value of an ordinary annuity is a financial concept that is used to calculate the…
Q: Suppose an investment earns 2.5% interest compounded continuously. Find the future value of a $3400…
A: Present value is an estimate of the present value of future cash values that may be received at a…
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 3 images
- You are considering an investment in a mutual fund with a 5% load and an expense ratio of 0.75%. You can invest instead in a bank CD paying 3% interest. Required: a. If you plan to invest for 3 years, what annual rate of return must the fund portfolio earn for you to be better off in the fund than in the CD? Assume annual compounding of returns. b. What annual rate of return must the fund portfolio earn if you plan to invest for 6 years to be better off in the fund than in the CD? c. Now suppose that instead of a front-end load the fund assesses a 12b-1 fee of 0.50% per year. What annual rate of return must the fund portfolio earn for you to be better off in the fund than in the CD? Note: Do not round intermediate calculations. Round your answers to 2 decimal places.You are considering an investment in a mutual fund with a 5% load and an expense ratio of 0.5%. You can invest instead in a bank CD paying 3% interest. Required: a. If you plan to invest for 4 years, what annual rate of return must the fund portfolio earn for you to be better off in the fund than in the CD? Assume annual compounding of returns. b. What annual rate of return must the fund portfolio earn if you plan to invest for 6 years to be better off in the fund than in the CD? c. Now suppose that instead of a front-end load the fund assesses a 12b-1 fee of 0.75% per year. What annual rate of return must the fund portfolio earn for you to be better off in the fund than in the CD? Note: Do not round intermediate calculations. Round your answers to 2 decimal places. a. Annual rate of return b. Annual rate of return c. Annual rate of return % % %You are considering an investment in a mutual fund with a 4.5% load and an expense ratio of 0.5%. You can invest instead in a bank CD paying 3.5% interest. If you plan to invest for 5 years, what annual rate of return (i.e. gross ret) must the fund portfolio earn for you to be better off in the fund than in the CD? Assume annual compounding.
- 3. You are considering to invest in a mutual fund with a 4% load and an expense ratio of 0.5%. Alternative, you may invest in a bank certificate of deposit (CD) paying 6% interest. a. If you plan to invest for 2 years, what annual rate of return must the mutual fund earn so that the result will be better than making investment in the CD ? Assume annual compounding of returns. b. How does your answer change if you plan to invest for 6 years ? c. Now suppose that instead of a front-end load, the mutual fund charges a fee of 0.75% per year. What annual rate of return must the mutual fund earn so that the result will be better than making investment in the CD ? Does your answer in this case depend on your time horizon ?You are considering an investment in a mutual fund with a 4% load and an expense ratio of .5%. You can invest instead in a bank CD paying 6% interest.a. If you plan to invest for 2 years, what annual rate of return must the fund portfolio earn for you to be better off in the fund than in the CD? Assume annual compounding of returns.b. How does your answer change if you plan to invest for 6 years? Why does your answer change?c. Now suppose that instead of a front-end load the fund assesses a 12b-1 fee of .75% per year. What annual rate of return must the fund portfolio earn for you to be better off in the fund than in the CD? Does your answer in this case depend on your time horizon?Suppose you consider investing $1,000 in a load fund which charges a fee of 2%, and you expect the fund to earn 14% over the next year. Alternatively, you could invest in a no-load fund with similar risk that is expected to earn 9% and charges a 1/2 percent redemption fee. Which is better and by how much? a. Funds are equal b. Load fund by $32.65 c. Load fund by $50.55 d. No-load fund by $64.55 e. No-load fund by $44.30
- You are considering an investment in a mutual fund with a 7% load and expense ratio of 0.5%. You can invest instead in a bank CD paying 3% interest. a. If you plan to invest for 5 years, what annual rate of return must the fund portfolio earn for you to be better off in the fund than in the CD? Assume annual compounding of returnsYou are considering purchasing a no - load mutual fund with an operating expense of .4% and a 12 b-1 expense of .25% . You are also considering purchasing a CD paying 3.0% per year. What minimum annual rate of return must the fund earn to make you better off in the fund versus the CD Group of answer choices 3.65 % 3.0 % 2.35% 3.4%You are considering an investment in a mutual fund with a 4% load and expense ratio of 0.5%. You can invest instead in a bank CD paying 6% interest.a. If you plan to invest for 2 years, what annual rate of return must the fund portfolio earn for you to be better off in the fund than in the CD? Assume annual compounding of returns. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
- You are considering an investment in a mutual fund with a 3% front-end load and an expense ratio of 0.6%. You can invest instead in a bank CD paying 5% interest. a. If you plan to invest for two years, what annual rate of return must the fund portfolio earn for you to be better off in the fund than in the CD? Assume annual compounding of returns. (Do not round intermediate calculations. Enter your answer as a percentage rounded to two decimal places.) Annual rate of return b. If you plan to invest for six years, what annual rate of return must the fund portfolio earn for you to be better off in the fund than in the CD? Assume annual compounding of returns. (Do not round intermediate calculations. Enter your answer as a percentage rounded to two decimal places.) Annual rate of return 7.13 % Annual rate of return % c. Now suppose that instead of a front-end load the fund assesses a 12b-1 fee of 0.85% per year. If you plan to invest for two years, what annual rate of return must the fund…You are considering an investment in a mutual fund with a 4% load and an expense ratio of 0.5%. You can invest instead in a bank CD paying 6% interest. Required: a. If you plan to invest for two years, what annual rate of return must the fund portfolio earn for you to be better off in the fund than in the CD? Assume annual compounding of returns. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Annual rate of return b. If you plan to invest for six years, what annual rate of return must the fund portfolio earn for you to be better off in the fund than in the CD? Assume annual compounding of returns. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Annual rate of return % Annual rate of return % c. Now suppose that instead of a front-end load the fund assesses a 12b-1 fee of 0.75% per year. What annual rate of return must the fund portfolio earn for you to be better off in the fund than in the CD? (Do not round intermediate…D3) Finance You invest in a mutual fund that charges a 3% front-end load, 1% operating costs, and a 1% 12b-1 fees. What are the total fees in year 1 on an initial investment of $20,000 with 10% annual growth in fund's asset value, or NAV? Note that "initial investment" means it is before the deduction of frontend load.