How many years will two mutual fund share classes result

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You are considering investing in a mutual fund's A share class that has a 3% sales charge (front-end load) and annual expense ratio of 1.0%. Alternatively, you might invest in that fund's C shares that have no load and an annual expense ratio of 1.5%. Assume the fund's assets return 9% annually.

Problem 1: For a 2-year holding period, which share class will you prefer?

Problem 2: For a 50-year holding period, which share class will you prefer?

Problem 3: After how many years will the two mutual fund share classes result in the same  future wealth amounts?

Problem 4: How does your answer to part c. change if the fund's assets return 14% per year?

Problem 5: What accounts for the greater expenses of the C-shares, compared to the A-shares?

Reference no: EM132916854

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