You purchased 500 shares in a mutual fund for $32 NAV. You elected the dividend reinvestment plan and had all dividend and capital gains distributions reinvested in additional shares. You just closed your account and sold 550 shares for $48 NAV. What was your total return on this investment?

Question

Kobe Garcia

Business

11 February, 05:24

You purchased 500 shares in a mutual fund for $32 NAV. You elected the dividend reinvestment plan and had all dividend and capital gains distributions reinvested in additional shares. You just closed your account and sold 550 shares for $48 NAV. What was your total return on this investment?

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Answers (1)

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Taylor Montgomery · Answer 1

Return on investment = 50%

Explanation:

Return on Investment is the proportion of investment cost that an investor earns as as return in dollar

For a mutual fund = total return in dollar/investment cost

= (48-32) * 500 / (500 * 32) * 100

=50%

Note that the gains in dollar is the difference between the selling price at the end and the selling price at the beginning.