VALU Mutual Fund has an offering price of $78

Business Mar 02, 2021

VALU Mutual Fund has an offering price of $78.50 and charges a 4% "front-end" load. What is the net asset value per share (NAVPS) at the time of purchase?

$78.50

$75.36

$81.64

$81.77

Expert Solution

Computation of Net Asset Value per Share (NAVPS);

Offer Price = Net Asset Value per Share/(1-Charge)

$78.50 = Net Asset Value per Share/(1-4%)

Net Asset Value per Share (NAVPS) = $78.50*(1-4%) = $81.77

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