CA Final · Advanced Financial Management · Mutual Funds
Meera invests ₹10,000 on the first day of each month through a SIP in a mutual fund scheme. The NAVs on the four investment dates are ₹20, ₹25, ₹20 and ₹10. Ignoring load and charges, what is her average cost per unit over the four instalments?
The average cost per unit is ₹16.67. A SIP invests a fixed amount each month, so it buys more units when the NAV is low. Total outlay of ₹40,000 divided by 2,400 units gives ₹16.67, which is below the simple average NAV of ₹18.75.
- A₹16.67Correct
- B₹18.75
- C₹20.00
- D₹15.00
Explanation
Units bought: 10,000/20 = 500; 10,000/25 = 400; 10,000/20 = 500; 10,000/10 = 1,000. Total units are 2,400 for ₹40,000, so the average cost is 40,000/2,400 = ₹16.67. ₹18.75 is the simple average of the NAVs, which ignores the fact that more units are bought when the NAV is low.
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