A mutual fund scheme has the following financial metrics: Value of equity shares: Rs. 300 crore; Value of debt instruments: Rs. 150 crore; Cash and money market balances: Rs. 20 crore; Dividend accrued but not received: Rs. 4 crore; Amount payable for shares purchased: Rs. 10 crore; Accrued AMC management fees payable: Rs. 2 crore. If the scheme has 4 crore outstanding units, what is the Net Asset Value (NAV) per unit?

[ A ]Rs. 118.50 per unit

[ B ]Rs. 112.50 per unit

[ C ]Rs. 120.00 per unit

[ D ]Rs. 115.50 per unit[ CORRECT ]

Takeaway

Option D is correct: Rs. 115.50 per unit

Derivation

NAV per unit is calculated using the accrual principle formula: NAV = (Total Assets - Scheme Liabilities other than to unitholders) / Number of outstanding units. Total Assets = Stocks (300) + Debt (150) + Cash (20) + Accrued Dividend (4) = Rs. 474 crore. Total Liabilities = Purchase Payables (10) + Accrued Fees (2) = Rs. 12 crore. Net Assets = Rs. 474 crore - Rs. 12 crore = Rs. 462 crore. NAV = Rs. 462 crore / 4 crore units = Rs. 115.50 per unit. This tests accurate accounting mechanics. The primary trap is omitting accrued receivables or failing to deduct current liabilities.

Why the others fail

A — Rs. 118.50 per unit

Rs. 118.50 per unit results from incorrectly ignoring scheme liabilities of Rs. 12 crore (Rs. 474 / 4 = 118.50).

B — Rs. 112.50 per unit

Rs. 112.50 per unit results from mistakenly deducting the accrued dividend income of Rs. 4 crore instead of adding it to total assets.

C — Rs. 120.00 per unit

Rs. 120.00 per unit is derived from arbitrarily assuming unit capital equals 3.85 crore units rather than the stated 4.0 crore units.