Prior to the ban on DSC, a client invested $50,000 in Class B (DSC) mutual fund units with a back-end load schedule of 5% in year 1, 4% in year 2, 3% in year 3, 2% in year 4, 1% in year 5, and 0% thereafter. If the client decided to redeem all units after 30 months (2.5 years), and the investment value had grown to $55,000, what would be the approximate redemption amount after the load was applied?

Question: Prior to the ban on DSC, a client invested $50,000 in Class B (DSC) mutual fund units with a back-end load schedule of 5% in year 1, 4% in year 2, 3% in year 3, 2% in year 4, 1% in year 5, and 0% thereafter. If the client decided to redeem all units after 30 months (2.5 years), and the investment value had grown to $55,000, what would be the approximate redemption amount after the load was applied?

Answer options:

• $55,000
• $53,350
• $52,800 ✅ $52,250

Correct answer: $52,250

Explanation: For any part of the 3rd year (after 24 months but before 36 months), the load would be 3%. The load is applied to the current market value of the investment: $55,000 * 0.03 = $1,650. The redemption amount would be $55,000 - $1,650 = $53,350.