Fundamentals of Finance 12th Edition Case Problem 12.2

A. Given Calvin's financial resources and investment objectives, what kinds of mutual funds should he consider?.......

B. What factors in Calvin's situation should be taken into consideration in the fund selection process?............ How might these affect Calvin's course of action?....

C. What types of services do you think he should for in a mutual fund?.....

D. What would be the size of his investment account 5 years from now? How large would the account be if it earned 15% on average and everything else remained the same?...... How important is the fund's rate of return to Calvin's investment situation? Explain.

Question D of the case:

essentially you have the initial amount, it earns interest to get to a higher amount, withdrawals are made from the higher amount and you have the end of year balance. That year end balance is the new initial amount for the next year, and so on and so on. For example, Year 1:

(100,000 x 1.10) = 110,000; (110,000 15,000) = 95,000