Question
Given the following information on index and mutual funds, answer the corresponding question: Initial (year 0) investment: 8,000 Annual contribution (starting year 1): 4,000 Annual
Given the following information on index and mutual funds, answer the corresponding question: Initial (year 0) investment: 8,000 Annual contribution (starting year 1): 4,000 Annual return of S&P 500 (assume same every year to compute): 11% Annual management fee of leading mutual fund: 1.25% Annual management fee of leading index fund (Fidelity index fund, ticker FNILX, as an example currently has 0.00% management fees): 0.0% Since it is very rare for an actively managed fund like a mutual und to beat the S&P 500 over many years, we will assume the mutual fund and index mimicking the S&P 500 will have the same rate of return (for simplicity). What percentage of the value of the index fund investment value after 40 years is the mutual fund investment value after 40 years? if the answer is 80 percent, give your answer as 80 or 80.0. Round to the nearest tenth of a percent.
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