document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=1196901>Question 1196901</A>: <I><SPAN STYLE=\"word-break: break-all;\"> Mr Swierkos invested $25000 in a mutual fund.\r<BR>\n" );
document.write( "\n" );
document.write( "If his broker deducted a 6% commission before turning rest of the money over to mutual fund, and value of each share increased by 18% during the year.\r<BR>\n" );
document.write( "\n" );
document.write( "Determine what percentage return on his investment did Mr Swierkos realize at the end of the first year\r<BR>\n" );
document.write( "\n" );
document.write( " </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #829947 by </B><A HREF=/tutors/aboutme.mpl?userid=Theo><B>Theo(13342)</B></A><img src=\"/images/stars/stars-13.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=Theo><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/cgi-bin/show-face.mpl?user=Theo><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=829947\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> he put 25000 in his account at the beginning of the year.<BR>\n" );
document.write( "the broker took out 6% = 1500.<BR>\n" );
document.write( "the remaining balance in the account at the beginning of the year was 23500.<BR>\n" );
document.write( "that was invested in the mutual fund, earning 18%.<BR>\n" );
document.write( "the remaining balance in the account at the end of the year was 23500 * 1.18 = 27730.<BR>\n" );
document.write( "his net profit was 27730 minus 25000 = 2730.<BR>\n" );
document.write( "2730 / 25000 = .1092 = 10.92%.\r<BR>\n" );
document.write( "<BR>\n" );
document.write( "\n" );
document.write( "if you look at the total transaction for the year, it is equivalent to:<BR>\n" );
document.write( "25000 * .94 * 1.18 = 25000 * 1.1092 = 27730.<BR>\n" );
document.write( "if he leaves the money in the account and the broker charges 6% each year and the mutual fund earns 18% each year, then the remaining balance in each succeeding year is equal to the remaining balance from the previous year * .94 * 1.18 = the remaining balance from the previous year * 1.1092.<BR>\n" );
document.write( "subtract 1 from that to get .1092 and multiply it by 100 to get 10.92% per year.<BR>\n" );
document.write( "at the end of the second year, he would have 27730 * 1.1092 = 30758.116.<BR>\n" );
document.write( "at the end of the third year he would have 30758.116 * 1.1092 = 34116.90227.<BR>\n" );
document.write( "this would continue for as long as the money remaining the account and the broker took 6% at the beginning of each year and the mutual fund earned 18% by  the end of each year.\r<BR>\n" );
document.write( "<BR>\n" );
document.write( "\n" );
document.write( " </SPAN>\n" );
document.write( "</TD></TR></TABLE>\n" );