Business, 07.05.2020 02:05 robertstoll81

7. How much will Adrian have if he allows his investment to remain in the mutual fund for 10 years?

8. How much will Clemens have if he allows his investment to remain in the index fund for 10 years?

9. How much more value does Clemens's investment generate than Adrian's in 10 years' time?

10. What about over 40 years' time

Answers: 1

Show answers

Answers

Answer from: kbuhvu

The question is incomplete! Complete question along with answer and step by step explanation is provided below.

Question:

Suppose both Adrian and Clemens invest $10,000 in a mutual fund.

Lets think of it another way so that we can see the impact of compounding on this investment. For simplicity's sake, we will assume that Adrian's rate of return is effectively 5.7% annually (7% - 1.3% fee) and Clemens's rate of return is effectively 6.8% annually (7% - 0.2% fee).

7. How much will Adrian have if he allows his investment to remain in the mutual fund for 10 years?

8. How much will Clemens have if he allows his investment to remain in the index fund for 10 years?

9. How much more value does Clemens's investment generate than Adrian's in 10 years' time?

10. What about over 40 years time?

7. Adrian's amount = $17,408

8. Clemens's amount = $19,306

9. Difference in amount after 10 years = $1,898

10. Difference in amount after 40 years = $47,114

Explanation:

7. How much will Adrian have if he allows his investment to remain in the mutual fund for 10 years?

Adrian will have a amount given by

$A = P\times(1+r)^{n}$

Where P is the invested amount, r is the annual rate of return and n is the number of years.

Here P = 10,000, r = 0.057, n = 10

$A = 10,000\times(1+0.057)^{10}\\\\A = 10,000\times 1.7408\\\\A = \$17,408$

8. How much will Clemens have if he allows his investment to remain in the index fund for 10 years?

Clemens will have a amount given by

$A = P\times(1+r)^{n}$

Here P = 10,000, r = 0.068, n = 10

$A = 10,000\times(1+0.068)^{10}\\\\A = 10,000\times 1.9306\\\\A = \$19,306$

9. How much more value does Clemens's investment generate than Adrian's in 10 years' time?

$\text {Difference} = \$19,306 - \$17,408 = \$1,898$

Therefore, Clemens's investment generate $1,898 more as compared to Adrian's in 10 years time period.

10. What about over 40 years time ?

Adrian's amount:

Here P = 10,000, r = 0.057, n = 40

$A = 10,000\times(1+0.057)^{40}\\\\A = 10,000\times 9.1833\\\\A = \$91,833$

Clemens's amount:

Here P = 10,000, r = 0.068, n = 40

$A = 10,000\times(1+0.068)^{40}\\\\A = 10,000\times 13.8947\\\\A = \$138,947$

$\text {Difference} = \$138,947 - \$91,833 = \$47,114$

Therefore, Clemens's investment generate $47,114 more as compared to Adrian's in 40 years time period.

Answer from: Quest

explanation:

kool beans

Answer from: Quest

answerproduct line length; product mix width;

Another question on Business

Business, 21.06.2019 22:10

Fess receives wages totaling $74,500 and has net earnings from self-employment amounting to $71,300. in determining her taxable self-employment income for the oasdi tax, how much of her net self-employment earnings must fess count? a. $74,500 b. $71,300 c. $53,900 d. $127,200 e. none of the above.

Answers: 3

Answer

Business, 22.06.2019 07:20

Go follow my instagram atx_humberto

Answers: 2

Answer

Business, 22.06.2019 17:00

Dan wants to start a supermarket in his hometown, and wants to get into the business only after finding out about the market and how successful his business might be. the best way for dan to gain knowledge is to:

Answers: 2

Answer

Business, 23.06.2019 01:10

Snuggables sells microwaveable heat packs online. their sales software collects customer/sales information and shares it with the customer service and sales departments. none of the customer complaints or suggestions reach the product development person, however. which step of the three-step processes for success is snuggables failing to use fully?

Answers: 2

Answer

You know the right answer?

7. How much will Adrian have if he allows his investment to remain in the mutual fund for 10 years?<...

Questions