You have $10,000 to invest which of the following will be your best investment vehicle?
Mutual Fund A: 5% load, expenses 1.25% per year. ARR = 9%, you expect to hold your investment for 3 years.
Mutual fund B: A no load fund with the following backend load.
Hold for a year or less 4%
Hold for two years or less 3%
Hold for 3 years or less 2%
Hold for less than 5 years 0.5%
The fund is expected to return 11%, and annual expenses are 1.3%, you expect to hold your investment for 2 years.
Mutual Fund A
(0.95)(1.09^2)(0.9875^3) = 1.1847
(1.1847^1/3) - 1 = 5.81%
Once again, I don't know how to solve for the back-end load. How do I figure out everything for Mutual Fund B?