The holding period return on a mutual fund was 30%. Its ending NAV was $26 and its cash dividends and other distribution was $1.50. Its beginning NAV must have been , assuming no front- or back-end load.

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

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