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Christina also invests $10,000, but instead chooses to invest into a passively managed index fund that is linked to the S&P 500, with an expense ratio of 0.2%. Her investment also earns a 7% rate of return. How much did she make in one year on her investment with the 7% rate of return? How much does she pay in fees for her passively managed index fund? At the end of the year, what’s the total value (AFTER FEES) of Christina’s mutual fund?

Respuesta :

a. The return on investment is $700.

b. The payment should be $20.

c. The total value is $10,680.

Calculation of the return on investment, payment and total value:

a.

Since the return on investment is 7%

And, the invested amount is $10,000

So, the return on investment should be

= 7% of $10,000

= $700

b. Since the expense ratio is 0.2%

So, here the payment be like

= 0.2% of $10,000

= $20

c. The total value should be

= $10000-$20 +$700

= $10680

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