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A hedge fund has $150 million in assets at the beginning of the year and 10 million shares outstanding throughout the year. Throughout the year assets grow at 12%. The fund charges a 3% management fee on the assets. The fee is imposed on year-end asset values. What is the end-of-year NAV for the fund

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jepessoa

Answer:

$16.30

Explanation:

The year end NAV for the hedge fund is:

NAV = [beginning assets x (1 + asset growth) x (1 - hedge fund's fees)] / total outstanding shares

NAV = (150 million x 1.12 x 97%) / 10 million = $162.96 million / 10 million = $16.30

The net asset value (NAV) of a hedge fund represents the market value of each  outstanding share of the fund.

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