The beginning NAV of the mutual fund msut have been 18.5$
Explanation:
Given details-
Annual return on the mutual fund= 30%
Final NAV of the mutual fund=$ 26
Cash dividends declared by the mutual fund=$ 1.5
Hence the starting NAV
Let us assume that starting NAV was $x
Hence after the declaration of the cash dividends, NAV of the issue= $(x+1.5)
In the end, the company would calculate annual return on $(x+1.5) amount
Hence annual return would be (30/100) * (x+1.5)
Net amount= x+ .3(x+1.5)
=1.3(x+1.5) by simplifying the above expression
The above equation must be equal to $ 26 which is the final NAV
Equating the both equation
1.3(x+1.5)=26
1.3x=26-1.95
x= $18.5
Hence the starting NAV was $ 18.5
