Answer:
3.44%
Explanation:
The computation of the return if sold the fund at the year end is shown below:
= {[Price × (1 - Front End Load) × ((1 + fund increase percentage) -expense ratio)] - price} ÷ price
={[$20 per share × (1 - 5.75%) × ((1 + 11%) - 1.25%)] - 20} ÷ 20
= 3.44%
We simply applied the above formula so that the correct return could come
Answer:
a) $1,918.17
b) 16.8 months
C) Yes, Capstone Turbine will remain in business.
Explanation:
a) To find the monthly cash expenses, we have:
Monthly cash expenses = negative cash flow from operations / 12
= 23018 / 12
= $1,918.17
b) To find the ratio of cash to monthly cash expenses, we have:
Ratio of cash to monthly cash expenses = Year end cash / monthly cash expenses
= $32,221 / $1,918.17
= 16.797
≈ 16.8 months
c) Yes, Capstone Turbine will remain in business because the calculated ratio above shows that they have cash to continue operations for approximately 16.8 months.
