To determine the after-withdrawal future value of $15,000 invested in each share class over 5 years, considering the costs (front-end load, back-end load, management fee, and 12b-1 fee), we need to calculate the effective future value for each share class. Here's the step-by-step approach:

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Key Assumptions:

1. Gross return: 12% annual rate.
2. Investment duration: 5 years.
3. Declining back-end load for Class B: Decreases 1% per year (0% in year 5).

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Calculations:

1. Net annual return:

The annual return after management and 12b-1 fees is: $\text{Net return} = \text{Gross return} - (\text{Management fee} + \text{12b-1 fee})$

For each class:

• Class A: $12\% - (0.55\% + 0.25\%) = 11.2\%$
• Class B: $12\% - (0.80\% + 0.50\%) = 10.7\%$
• Class C: $12\% - (0.95\% + 1.00\%) = 10.05\%$

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2. Initial investment after front-end load:

The initial investment for each class is reduced by the front-end load:

• Class A: $15,000 \times (1 - 0.0452) = 14,322$
• Class B and Class C: $15,000$ (no front-end load).

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3. Future value (before back-end load):

Using the compound interest formula: $FV = P \times (1 + r)^t$ Where:

• $P$: Initial investment after front-end load.
• $r$: Net annual return.
• $t$: Number of years (5 years).

For each class:

• Class A: $FV = 14,322 \times (1 + 0.112)^5$
• Class B: $FV = 15,000 \times (1 + 0.107)^5$
• Class C: $FV = 15,000 \times (1 + 0.1005)^5$

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4. After-withdrawal future value:

The final value considers any back-end load at the time of withdrawal:

• Class A: No back-end load.
• Class B: Back-end load is 0% in year 5.
• Class C: Back-end load is 1.01%.

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Performing Calculations future value for each share class

Given data

P_A = 15000 * (1 - 0.0452) # Initial investment for Class A after front-end load P_B = 15000 # No front-end load for Class B P_C = 15000 # No front-end load for Class C

r_A = 0.112 # Net annual return for Class A r_B = 0.107 # Net annual return for Class B r_C = 0.1005 # Net annual return for Class C

t = 5 # Investment duration in years

Future value formula: FV = P * (1 + r)^t

FV_A = P_A * (1 + r_A) ** t # Future value for Class A FV_B = P_B * (1 + r_B) ** t # Future value for Class B FV_C = P_C * (1 + r_C) ** t # Future value for Class C

Considering back-end load at withdrawal

back_end_C = 0.0101 # Back-end load for Class C (1.01%) FV_C_final = FV_C * (1 - back_end_C) # After back-end load deduction for Class C

Class B has no back-end load in year 5

FV_B_final = FV_B

Class A has no back-end load

FV_A_final = FV_A

FV_A_final, FV_B_final, FV_C### After-Withdrawal Future Values:

1. Class A: $24,351.61
2. Class B: $24,936.15
3. Class C: $23,968.06

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Best Investment:

• Class B offers the highest after-withdrawal future value for a 5-year investment, making it the best option if the fund will be sold at the end of the period.

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Do you want to review the detailed calculations or compare alternative scenarios?

Related Questions:

1. What if the investment period were extended to 10 years?
2. How does the declining back-end load affect Class B over shorter time periods?
3. Can the management fees impact long-term returns more significantly?
4. How would these calculations change with a higher gross return (e.g., 15%)?
5. What is the breakeven point in returns for Class C to outperform others?

Tip: Always compare both front-end and back-end costs in relation to investment