Question

Iridium Mutual fund had assets of INR 25,000,000 (incl. Cash) and liabilities of INR 10,000,000. The mutual fund had incurred expenses of INR 50,000 and received income by way of interest and dividends of INR 100,000. There are 1,000,000 shares outstanding as of this date. The NAV of the mutual fund is:

Answer 1

The NAV of the mutual fund is INR 15.05

Explanation:

The NAV (Net Asset Value) of the mutual fund is computed as:

NAV (Net Asset Value) = (Market Value of All Securities Held by Fund + Cash and Equivalent Holdings - Fund Liabilities) / Total Fund Shares Outstanding

where

Market Value of All Securities Held by Fund is INR 25,100,000 (that is INR 25,000,000 + INR 100,000)

Liabilities amounts to INR 10,050,000 (that is INR 10,000,000 + INR 50,000)

Total Fund Shares Outstanding is 1,000,000 shares

Putting the values above:

NAV (Net Asset Value) = (INR 25,100,000 - INR 10,050,000) / 1,000,000

NAV (Net Asset Value) = INR 15,050,000 / 1,000,000

NAV (Net Asset Value) = INR 15.05