Question

If the total value of the mutual fund scheme is $Rs.200$ crores and $8$ crore units are issued then find the NAV of one unit.

Answer 1

Hint: In this question we are given the total value of the mutual fund scheme and the number of units issued. Using the two given things, we have to find the Net Asset Value (NAV) of one unit of mutual fund. NAV can be calculated by dividing the total value of mutual funds by the number of units issued.

Formula used: NAV = $\dfrac{{{\text{Market value of all assets}}}}{{{\text{Total shares outstanding}}}}$

Complete step-by-step answer:
We are given that- total value of mutual fund scheme= $Rs.200$ crores
Number of units of mutual fund scheme issued= $8$ crore units
Before calculating, let’s understand a little about Net Asset Value.
Net asset value is calculated by taking the market value of all the assets in a portfolio minus all the liabilities, divided by the number of shares outstanding.
Market value of assets is simply the worth of the assets in the market. Since the value of assets change over time, their market value also keeps changing.
Number of shares outstanding is the number of shares of a mutual fund issued and subscribed by the investors.
Therefore, using the information given in the question,
NAV = $\dfrac{{{\text{Market value of all assets}}}}{{{\text{Total shares outstanding}}}}$
$ \Rightarrow \dfrac{{200{\text{ crore}}}}{{8{\text{ crore}}}}$
On simplifying,
$ \Rightarrow 25{\text{ }}$

Hence, NAV of one unit = $Rs.25$

Note: In this question, we were given the total value of assets directly. If it had not been given then, the total value of assets can be calculated by adding all the assets including cash, and subtracting all the liabilities.
Net market value of assets = Market value of assets + Cash - Liabilities