Question: A Mutual Fund having 300 units has shown Net Asset Value (NAV) of ` 8.75 and ` 9.45 at the beginning and at the end

A Mutual Fund having 300 units has shown Net Asset Value (NAV) of ` 8.75 and ` 9.45 at the beginning and at the end of the year respectively. The Mutual Fund has given two options : (i) Pay ` 0.75 per unit as dividend and ` 0.60 per unit as capital appreciation; or (ii) These distributions are to be reinvested at an average NAV of ` 8.65 per unit.

What difference it would make in terms of return available and which option is preferable ?

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