Suppose Billy has $10,000 to invest and is considering investing in a fund for two years. The fund charges a front-end load of 1.50 percent, which is deducted from the original funds invested. In addition, the fund charges an annual expense fee of 0.75 percent, which is charged on the average asset value invested in the fund and is recorded at the end of each year. Billy expects the fund's gross rate of return will be 10 percent per year. If Billy reinvests the annual returns paid on the investment, what is his annual return on the fund over the two-year investment period ?

Select one:

a.

8.39 percent

b.

9.25 percent

c.

8.50 percent

d.

7.82 percent

e.

7.75 percent