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Bogdan [553]
3 years ago
11

Let’s see how fees can hurt your investment strategy. Let’s assume that your mutual fund grows at an average rate of 5% per year

—before subtracting the fees. Use the rule of 70 and round your answers to the nearest tenth of a year.
a. How many years will it take for your money to double if fees are 0.5% per year?
Doubling time:_______years.
b. How many years will it take for your money to double if fees are 1.5% per year (not uncommon in the mutual fund industry)?
Doubling time:________years.
c. How many years to double if fees are 2.5% per year?
Doubling time:_______years.
Business
1 answer:
elena-14-01-66 [18.8K]3 years ago
6 0

Answer:

We notice that the more the fees increase for a constant rate of return, the number of years it takes to double on the investment also increases. For example;

a). 15.6 years

b). 20 years

c). 28 years

Explanation:

The rule of 70 is a formula that can be used to estimate the number of years it will take an investment to double up.The formula is expressed as;

Number of years to double=70/Annual rate of return

a). Given;

Annual rate of return per unit of investment=5%

Annual fees per unit of investment=0.5%

Net rate of return=Annual rate of return-Annual fees=(5%-0.5%)=4.5%

Replacing;

Number of years to double=70/Net rate of return

=70/4.5=15.555 to nearest tenth=15.6 years

b). Given;

Annual rate of return per unit of investment=5%

Annual fees per unit of investment=1.5%

Net rate of return=Annual rate of return-Annual fees=(5%-1.5%)=3.5%

Replacing;

Number of years to double=70/Net rate of return

=70/3.5=20.0 to nearest tenth=20 years

c). Given

Annual rate of return per unit of investment=5%

Annual fees per unit of investment=2.5%

Net rate of return=Annual rate of return-Annual fees=(5%-2.5%)=2.5%

Replacing;

Number of years to double=70/Net rate of return

=70/2.5=28.0 to nearest tenth=28 years

We notice that the more the fees increase for a constant rate of return, the number of years it takes to double on the investment also increases

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An employee earns $24 per hour and 1.5 times that rate for all hours in excess of 40 hours per week. Assume that the employee wo
ANTONII [103]

Answer:

Gross pay for the week is $1,500

Net pay for the week is $1,043

Explanation:

The gross pay is computed thus:

Normal rate pay  40 hrs*$24               =$960

Above normal pay(55-40)*$24*1.5     =$540

Gross pay                                               $1,500

Deductions:

Social security(6.0%*$1,500)                 ($90)

Medicare(1.5%*$1,500)                          ($22.5)

Federal income tax                                ($345)

Net pay for the week                              $1,043

The net pay for the week is gross pay less social security tax,medicare as well as the federal income tax,$1043 is the employee net pay for the week

4 0
2 years ago
All of the following would be considered closing costs except for: a) A title search b) Cost of repainting the kitchen before mo
otez555 [7]
B/ <span>Cost of repainting the kitchen before moving in</span>
5 0
3 years ago
Hubert lives in San Francisco and runs a business that sells boats. In an average year, he receives $842,000 from selling boats.
aev [14]

Answer:

Explicit costs are normal costs of operating a business.

Implicit costs are opportunity costs meaning that they are the benefits foregone by engaging in a certain course of action.

The wholesale cost for the pianos that Hubert pays the manufacturer ⇒ EXPLICIT COST.

The salary Hubert could earn if he worked as an accountant ⇒ IMPLICIT COST.

The wages and utility bills that Hubert pays ⇒ EXPLICIT COST

The rental income Hubert could receive if he chose to rent out his showroom. ⇒ IMPLICIT COSTS

Accounting Profit = Revenue - Explicit costs

= 842,000 - 452,000 - 301,000

= $89,000

Economic Profit = Revenue - Explicit costs - Implicit costs

= 842,000 - 452,000 - 301,000 - 38,000 - 48,000

= $3,000

If Hubert's goal is to maximize his economic profit, he <u>should</u> stay in the piano business because the economic profit he would earn as an accountant would be -$3,000.

<em>Economic profit as accountant = Salary + rental income - accounting profit from piano</em>

<em>= 48,000 + 38,000 - 89,000</em>

<em>= -$3,000</em>

6 0
2 years ago
Write the AddressList method newBusiness. This method searches addresses for an existing business with an identical address (i.e
max2010maxim [7]

Answer:

See explaination

Explanation:

// Address.java

public class Address {

/**

* The name of the business

*/

private String name;

/**

* The name of the street the business is on

*/

private String street;

/**

* The street number of the business

*/

private int number;

/**

* Constructs an Address that represents a business with name nm,

* at number no on the street st

*/

public Address(String nm, String st, int no)

{

name = nm;

street = st;

number = no;

}

/**

* Returns the name of the business

*/

public String getName()

{

return name;

}

/**

* Returns the name of the street on which the business is located

*/

public String getStreet()

{

return street;

}

/**

* Returns the street number of the business

*/

public int getNumber()

{

return number;

}

}

//end of Address.java

//AddressBook.java

import java.util.ArrayList;

import java.util.List;

public class AddressBook {

/**

* The list of business addresses. No two businesses in the list

* can have the same address (both the same street and street number)

*/

private List<Address> addresses;

/**

* Constructs an empty AddressBook

*/

public AddressBook()

{

addresses = new ArrayList<Address>();

}

/**

* atparam st the name of a street

* atreturn a list with the names of each business with an address on that street

*/

public List<String> onStreet(String st)

{

// create an empty output list of names of business

List<String> businessName = new ArrayList<String>();

// loop over the list of addresses

for(int i=0;i<addresses.size();i++)

{

// if ith street of address = nm, add the name of the business to the output list

if(addresses.get(i).getStreet().equalsIgnoreCase(st))

businessName.add(addresses.get(i).getName());

}

return businessName; // return the list

}

/**

* Searches for an existing business with an identical address (street and number

* both match). Updates the record to an address with name nm, street st and number no.

* If no entry already exists adds a new address to the end of the list with these parameters.

*

* atparam nm the name of the business

* atparam st the street the business is on

* atparam no the street number of the business

* atreturn the index of where the business address is on the list

*/

public int newBusiness(String nm, String st, int no)

{

// loop over the list of addresses

for(int i=0;i<addresses.size();i++)

{

// if ith index addresses match the street and number of the input st and no

if((addresses.get(i).getStreet().equalsIgnoreCase(st)) && (addresses.get(i).getNumber() == no))

{

addresses.remove(i); // remove the ith address from list

addresses.add(i, new Address(nm,st,no)); // add a new address with the input name, street and number at ith index

return i; // return the index i

}

}

// if no address match, add the business at the end of the list

addresses.add(new Address(nm,st,no));

return addresses.size()-1; // return the last index

}

}

//end of AddressBook.java

5 0
3 years ago
___________are funds that the bank keeps on hand that are not loaned out or invested in bonds.
skad [1K]

Answer:

Reserves is your answer...

Explanation:

Hope this helps you!!!

3 0
2 years ago
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