Please solve & help me understand this question Jillian Best is choosing between two mutual funds. Fund A has a front-end load of 4%, a net asset value (NAV) of $60.00, and an expected return of 13.0%. Fund B has a redemption fee of 1.5%, a NAV of $27, and an expected return of 10%. Jillian will invest $50,000 in either fund. Which of the following statements is most accurate if Jillian has a 6-month holding period? The: A) investor is better off with the redemption fee fund by $592.50. B) investments are equal. C) investor is better off with the front-end load fund by $120.00. D) investor is better off with the redemption fee fund by $712.50.
For the redemption fee fund: 50000(1+0.05)(1-0.015)=51712,5 For the front-end load fund: 50000(1+0.065)(1-0.04)=51120 It is 1+0.05 and 1+0.065 in the parenthesis because it’s half a year so you divide it by 2. So that lead to the conclusion that the investor is better off with the redemption fee fund by $592.50, so A. Is that the answer? Alex.
yes that is correct