Considering investment in mutual fund

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Reference no: EM131972587

You are considering an investment in a mutual fund with a 3% front-end load and an annual expense ratio of 0.5%. An alternative investment is a bank CD paying a 7% effective annual interest rate.

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? Use annual compounding.

Reference no: EM131972587

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