Compute the rate of return on the investment

Assignment Help Accounting Basics
Reference no: EM133183276

Question - Use the approximate yield formula to compute the rate of return on the investment in Part A and B, respectively. Show your steps to get partial credit. For dollar amount, keep two decimal places. For the approximate yields, keep three decimal places and express them as percentages.

Part A - Paul purchased 100 shares of a no-load mutual fund at a net asset value (NAV) of $85 per share. During the year, Paul received dividend income distributions of $4.50 per share and capital gains distributions of $9.10 per share. At the end of the year, the shares had a NAV of $80 per share.

Part B - Baron Growth Fund is a load fund. Two years ago, it was being quoted at a NAV of $33.50 and an offer price of $35.80; today, it's being quoted at a NAV of $34.18 and an offer price of $36.05. Use the approximate yield formula to calculate the rate of return on this load fund. The dividends and capital gains distributions over the two-year period are totaled at $2.80 a share.

Part C - If the growth fund in Part B above were a no-load fund, other things being equal, would the rate of return be higher or lower than that calculated in Part B? Why?

Reference no: EM133183276

Questions Cloud

What is the value three years from now : A 5-year annuity of ten Php40,000 semi-annual payments will begin 9 years from now, What is the value three years from now
What is the taxable net income : X Corporation opted to deduct OSD. The following are the results of its operation: Net sales -P3,450,000; What is the taxable net income
Discuss the significance of taxes and its effect : Discuss the significance of taxes and its effect to current businesses, livelihood of people, the government and its citizens. Provide possible circumstances
What is the importance or significance of earning : What is the importance or significance of earning the degree and how will this degree assist you to reach your professional goals?
Compute the rate of return on the investment : Use the approximate yield formula to compute the rate of return on the investment in Part A and B, respectively. Show your steps to get partial credit
Explain the background of your business enterprise : Budgeting Policies and Projection - You and your fellow friends are managers in your business enterprise. Explain the background of your business enterprise
Create cost of production report using fifo method : The ending inventory was 70% complete with respect to materials and 60% complete with respect to labor. Create cost of production report using FIFO method
What is the cost of new common stock : Dividends are expected to grow at a constant rate of 10% per year. Flotation costs on the new issue will be P3.75 per share. What is cost of new common stock
Calculate the relevant cost for cases : The £1,000 does include £100 of overtime costs that will have to be paid if the order is accepted. Calculate the relevant cost for cases

Reviews

Write a Review

Accounting Basics Questions & Answers

  What is the expected return on m simon inc

The beta of M Simon Inc., stock is 1.8, whereas the risk-free rate of return is 0.07. If the expected return on the market is 0.16, then what is expected return

  What component cost of debt should be used

If ABC's tax rate is 40%, what component cost of debt should be used in the WACC calculation

  What is the single equivalent rate of discount

To promote the start of the sale, an additional discount of $65 was offered on the first day of the sale. What is the single equivalent rate of discount

  Why important for financial accountants

Why important for financial accountants and management accountants to work together in determining the potential benefits of management accounting reports?

  Compare bank deposits to the journal entry for cash receipts

Concerning how companies control cash received by mail, Compare the bank deposits to the journal entry for cash receipts

  Hr function in managing the organisation

You have been commissioned by the Chief Executive Officer (CEO) of your organisation (or one with which you are familiar) to examine and report on the role of the HR function in managing the organisation and to demonstrate how the organisational a..

  Discuss different types of cash flow as operating activities

Discuss and provide examples of different types of cash flows as operating, investing, and financing activities. The response must be typed.

  Determine the number of equivalent units of production

Direct materials are placed into the process at the beginning of production. Determine the number of equivalent units of production

  Estimating the demand and supply curves

The following relations describe monthly demand and supply relations for dry cleaning services in the metropolitan area:

  Samuelson and messenger sampm began 2013 with 200 units of

samuelson and messenger sampm began 2013 with 200 units of its one product. these units were purchased near the end of

  Determine whether rachels basket weaving shop should carry

e7-9 rachel ray recently opened her own basket weaving studio. she sells finished baskets in addition to the raw

  The role of the board of directors in corporate governance

What is the role of the board of directors in corporate governance?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd