Nezzie has invested in 300 shares of the LKIT Mid-Cap fund, with a current Net Asset Value (NAV) of [tex]$16.58. She desires to sell her shares once she can earn a profit of $[/tex]5,000.
Let’s find the necessary NAV she requires to achieve her target profit.
1. Initial Investment Calculation:
- She purchased 300 shares at a NAV of [tex]$16.58.
- Total investment cost = 300 shares * $[/tex]16.58 = [tex]$4,974.
2. Target Selling Value Calculation:
- To earn a profit of $[/tex]5,000, Nezzie needs to sell her shares for [tex]$4,974 (initial investment) + $[/tex]5,000 (profit).
- Therefore, the total selling price should be [tex]$9,974.
3. Required NAV Calculation:
- The required NAV would be the total selling price divided by the number of shares.
- Required NAV = Total Selling Value / Number of Shares
- Required NAV = $[/tex]9,974 / 300 ≈ [tex]$33.25
Thus, the NAV must reach approximately $[/tex]33.25 for Nezzie to achieve her desired profit.
4. Choosing the Closest Option:
- We are given the choices: [tex]$16.67, $[/tex]33.25, [tex]$33.57, $[/tex]33.66.
- The closest and most accurate choice to the calculated required NAV of approximately [tex]$33.25 is indeed $[/tex]33.25.
Therefore, Nezzie should select the answer (b) $33.25.
