ou have invested P100,000 in a mutual fund that promises to pay 8% each year. You will keep this for 10 years and then cash out the total value. The cost to close the mutual fund account by then is expected to be P5,000. If your minimum return from this investment is 7%, compute for your cost of illiquity with regard to the investment.

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 16P
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You have invested P100,000 in a mutual fund that promises to pay 8% each year. You will keep this for 10 years and then cash out the total value. The cost to close the mutual fund account by then is expected to be P5,000. If your minimum return from this investment is 7%, compute for your cost of illiquity with regard to the investment.

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