Rate of Return

sdamico71

New member
Joined
Jul 25, 2018
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2
Suppose you invest $50 each month (starting today) into a mutual fund. You reinvest distributions. At the end of 5 years, you sell all your shares and receive $3,485. Calculate your rate of return.
a. 5.96 %
b. 5.77%
c. 0.48%
d. 133.69%

I selected 5.96% but it was marked wrong. I used the TVM method.
n = 60
1/y =
PV = 0
pymt = -50
FV = 3485

Help!
 
Suppose you invest $50 each month (starting today)
5.96 is correct IF the 1st $50 is a month later (deferred annuity)

5.77 is correct if the 1st $50 is right away (immediate annuity):
seems to be the case since "starting today" is specified.
 
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