Thank you Mr. Bolt for visiting Station KVRT last week, with your son and his classmates. We are confident that your son, his classmates and you enjoyed touring our facilities as much as we enjoyed showing them to you. We take great pride in showing guests around Station SVRT.

According to Miss Janice Stanford your son’s teacher your son and his classmates enjoyed visiting our makeup, animation, and technology departments. They also enjoyed having pictures taken with some of our stars, and having lunch with our director. I also understand that many of the children asked their favorite teenage star to sign photographs for them.

Furthermore I appreciated the opportunity to discuss with you programming for school-age children. I hope this discussion will continue and I encourage your further dialogue with me. We are currently working on next fall’s schedule and your comments are greatly appreciated.

Please telephone me at 555-0159, with any other comments or questions.

Alfred McRay President

The equity funds sell class A Share with a front load of 5% and class B share with fees of 0.5% annually as well as back -end load fees that start at 5% and fall by 1% for each full year the investor holds portfolio (Until the tenth year). Assume the rate of return on fund portfolio net of operating expenses is 10% annually.

Required

(a)

1.      What is the value of $100,000 investments in Class A and B shares if the share are sold after 1 year, 4 years and 10 years?

2.      Which fee structure provides higher net proceeds at the end of each of (1) above investment horizons? Briefly comment on your findings

(b) The nguvumali fund had excellent investment performance last year with a portfolio return that placed it in the top 10% of all funds with similar investment policy. Do you expect it to be a best performer next year? Briefly explain any three reasons why or why not?