Answer:
4.23%
Explanation:
Given
Investment = $21,600
Front-end load = 4%
Rate of return is calculated by:
End investment - Beginning investment/ Beginning investment
First we calculate the available fund.
This is calculated as:
Available fund= Investment x (1- Front-end load %)
Available Fund = $21,600 x (1 - 4%)
Available Fund = $21,600 * (1 - 0.04)
Available Fund = $20,736
Then we Calculate the number of shares.
This is given by;
Shares= Available Fund/NAV
Where NAV = $18 Per share
Shares =$20,736/$18 per share
Shares = 1,152 shares
The NAV end is then calculated.
This is calculated by;
NAV End =NAV Begining * (1+ Growth rate)
NAV End =$18 *(1+.10)
NAV End = $18 * 1.10
NAV End =$19.80
The Year end asset value is then calculated by
Assets Value = NAV end * number of shares
Assets Value =$19.80 x 1,152
Assets Value = $22,809.60
The end investment is also calculated by;.
End investment=year end asset value x (1- expense ratio)
End Investment =$22,809.60 x (1-.013)
End Investment =$22,513.08
Lastly, End investment - Beginning investment/ Beginning investment
=(22,513.08-21,600)/21,600
=0.0423
= 4.23%
