Final answer:
To calculate the total cost per share for a mutual fund investment, add the net asset value (NAV), sales load, and administrative fee together, but ignore the underwriter's concession as it is typically included in the sales load. After calculating, the cost per share is found to be $8.45, but due to a possible error in the options provided, the closest correct answer option seems to be $8.42.The answer is D)
Step-by-step explanation:
The student's question involves calculating the total cost per share to purchase a Class A share of a mutual fund, given the net asset value (NAV), sales load, and administrative fees. To find out the total cost per share, we add these amounts together.
The NAV of the fund is given as $7.80 per share, the sales load is $0.50 per share, and there is an administrative fee of $0.15 per share. The concession paid to the underwriter is typically included in the sales load and would not be an additional cost to the investor. Therefore, we do not add the concession to the investor's cost.
To calculate the total cost per share:
- Net Asset Value (NAV): $7.80 per share
- Sales Load: $0.50 per share
- Administrative Fee: $0.15 per share
Total Cost per Share = NAV + Sales Load + Administrative Fee
Total Cost per Share = $7.80 + $0.50 + $0.15
Total Cost per Share = $8.45
The total cost per share for the investor to purchase a Class A share of the mutual fund is $8.45. However, since this is not one of the options provided, it appears there might be a mistake in the question or in the provided options. The closest value to our calculated total cost per share is $8.42, which might be the intended correct answer due to rounding or a typographical error in the question.