ou invest $1000 in a mutual fund. You expect that the fund will earn a 8% return annually before expenses (~this is how much the fund's assets go up). You have a choice between purchasing class A mutual fund shares with a front-end load of 4% and no expenses or class C mutual fund shares with no loads but a 1% 12b-1 fee. What is your investment horizon if you are indifferent between these two

4.3883 years

Explanation:

The investment horizon to be indifferent between both investments is the number of years it takes for the total investment sum + interest on both investments to be the same. If that value is 'n', then

the value of class A mutual fund at n years =

the value of class C mutual fund after n years =

At the point of indifference, the values of both investments will be the same.

Therefore,

This is the value of n that solves the equation (deduced by interpolation).

Therefore the investment horizon of indifference = 4.3883 years.

the answer is 10c + 6b = 32

step-by-step explanation: