Question

Amit invests ₹ 10,000 in a mutual fund. Entry load is 2% and exit load is 1%, before 2 years and nil after 3 years. He receives divided of ₹1,000, ₹1,100 and ₹ 1,200 for 3 years in cumulative dividend scheme. What is his 

 a) total rate of return        b) Annualized rate of return,

if he redeems all units after 3 years?

Answer 1

Answer:

The exit load will be = 1% X 500 (number of units) X 100 (NAV) = Rs 500. This amount will be deducted from the redemption proceeds which gets credited to your bank account. So for this, the redemption amount received in your bank account will be Rs 49,500 (Units 500 X NAV Rs 100 – Rs 500 exit load = Rs 49,500.