An investor registers a monthly SIP of Rs. 6,000. In Month 1, the scheme NAV is Rs. 20.00; in Month 2, the NAV falls to Rs. 15.00; in Month 3, the NAV rises to Rs. 24.00. What is the total number of units accumulated and the average cost per unit under Rupee Cost Averaging?

[ A ]900 units accumulated at an average cost of Rs. 20.00 per unit

[ B ]1,000 units accumulated at an average cost of Rs. 15.00 per unit

[ C ]950 units accumulated at an average cost of Rs. 18.95 per unit[ CORRECT ]

[ D ]750 units accumulated at an average cost of Rs. 24.00 per unit

Takeaway

Option C is correct: 950 units accumulated at an average cost of Rs. 18.95 per unit

Derivation

Rupee Cost Averaging buys more units when prices fall and fewer when prices rise. Calculations: Month 1 (NAV Rs. 20) = Rs. 6,000 / 20 = 300 units. Month 2 (NAV Rs. 15) = Rs. 6,000 / 15 = 400 units. Month 3 (NAV Rs. 24) = Rs. 6,000 / 24 = 250 units. Total units = 300 + 400 + 250 = 950 units. Total amount invested = Rs. 18,000. Average acquisition cost per unit = Rs. 18,000 / 950 = Rs. 18.947 (approx Rs. 18.95). Simple average of NAVs is (20+15+24)/3 = Rs. 19.67. Rupee cost averaging lowered the purchase cost below simple average. This tests SIP math. The common trap is simple arithmetic averaging.

Why the others fail

A — 900 units accumulated at an average cost of Rs. 20.00 per unit

900 units erroneously assumes a flat, constant unvarying NAV of Rs. 20.00 applied across all three investment months.

B — 1,000 units accumulated at an average cost of Rs. 15.00 per unit

1,000 units incorrectly assumes the lowest NAV of Rs. 15.00 applied to all three monthly instalments.

D — 750 units accumulated at an average cost of Rs. 24.00 per unit

750 units incorrectly assumes the highest peak NAV of Rs. 24.00 applied across all three monthly instalments.