Jamie purchased 500 units of an equity mutual fund (Series A) at $20.00 per unit in a non-registered account. Over the year, the fund paid out $0.50 per unit in capital gains distributions and $0.25 per unit in income distributions. Jamie reinvested all distributions. At year-end, the NAV per unit was $21.00. What was Jamie's adjusted cost base (ACB) per unit at year-end?

Question: Jamie purchased 500 units of an equity mutual fund (Series A) at $20.00 per unit in a non-registered account. Over the year, the fund paid out $0.50 per unit in capital gains distributions and $0.25 per unit in income distributions. Jamie reinvested all distributions. At year-end, the NAV per unit was $21.00. What was Jamie's adjusted cost base (ACB) per unit at year-end?

Answer options:

• $20.00 ✅ $20.75
• $21.00
• $20.25

Correct answer: $20.75

Explanation: When distributions are reinvested, they increase the investor's Average Cost Base (ACB). The initial ACB per unit is $20.00. The total distributions per unit were $0.50 (capital gains) + $0.25 (income) = $0.75. Since these were reinvested, Jamie's ACB per unit increases by this amount, making it $20.00 + $0.75 = $20.75.