Personal Finance 1st Edition by Jack R. Kapoor

Exercise 33

Using Dollar Cost Averaging. Over a four-year period, Matt Ewing purchased shares in the Oakmark I Fund. Using the following information, answer the questions below. You may want to review the concept of dollar cost averaging in Chapter 14 before completing this problem.

a. At the end of four years, what is the total amount invested?

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b. At the end of four years, what is the total number of mutual fund shares purchased?

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c. At the end of four years, what is the average cost for each mutual fund share?

Step 1 of 3

a)

Compute the total amount invested:

The total amount M had invested is the addition of all the investment he made over the four years.

The total investment made for each year is $3,000.

YEAR	INVESTMENT	PRICE PER SHARE
2010	$3000	$40per share
2011	$3000	$45per share
2012	$3000	$42per share
2013	$3000	$50per share

Therefore, the total amount M had invested is $12000 in the four year period.