A Prospective PFP Client Comes to You with an Investment

question 6

Multiple Choice

A prospective PFP client comes to you with an investment statement.The first page of the statement,which contained the initial investment amount of a mutual fund purchased five years ago,is missing,and as a result the initial cash flow is -0-.The initial investment of the mutual fund can be determined based on the following information provided in the investment statement.The statement indicates that the five-year return for the investment was 10 percent.
Year 1: capital gain and dividend were $100
Year 2: capital gain and dividend year were $150
Year 3: no capital gain or dividend paid and the client invested $1,000
Year 4: no capital gain or dividend paid
Year 5: no capital gain or dividend paid and the client sold out of his position for $18,000

• A)8,484.2598.
• B)10,640.1450.
• C)11,574.3498.
• D)11,487.3091.

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Definitions:

National Income

The total value of all goods and services produced by a country over a specific period, usually measured as Gross National Product (GNP) or Net National Product (NNP).

Capitalists

Individuals or entities that own capital goods, invest in production, and seek to generate profits within an economy.

Labor

The application of physical and cognitive labor in the manufacture of goods and provision of services.

Entrepreneur

An individual who initiates, organizes, and operates a business venture while assuming the associated risks.