Three and a half years ago you purchased 1200 units of a fund with a NAV of $16.75.The NAV is now $34.50 and the fund had a 6 percent redemption fee declining at 1 percent per year and based on the value of the holdings at the time of the transaction.What will be the proceeds if you sell it today?

Question

Quizplus · Accepted Answer

First, calculate the total cost of the initial purchase:
1200 units x $16.75 = $20,100

Next, calculate the redemption fee:
6% x $20,100 = $1,206 (initial redemption fee)
1% x 3.5 years x $20,100 = $703.50 (additional reduction in redemption fee)

Total redemption fee = $1,206 - $703.50 = $502.50

Calculate the current value of the investment
1200 units x $34.50 = $41,400

Subtract the redemption fee from the current value:
$41,400 - $502.50 = $40,897.50

Therefore, the answer is choice C, $40,158.

Three and a Half Years Ago You Purchased 1200 Units