Which option is good in mutual fund?

In India, we get three options for mutual fund: Growth (where once you buy your investment grows or drops till u decide to sell), Dividend (Regular/irregular money is paid as dividend as a percentage of the face value), Dividend reinvestment option (The dividend so released is reinvested).

Now i have done quite a lot of study on which one is better and i have picked the Dividend option. Let me argue it out in the next few paragraphs. This is valid only for equity mutual fund and not logical for the income/debt mutual fund.

Let us assume that i decide to invest Rs 5000 on a NFO or an existing mutual fund and assuming the face value or the present value is 100 i get 50 shares of mutual fund. The dividend scheme gave 50% dividend in the first year itself as the market was really good. Now i decide to sell after 2 years and take out 3500 due to some unforeseen scenario (Effectively delaying is non-negotiable) and that the market had tanked and my mutual fund return on this day went down by 25% from the face value at which i bought. So let us see how the three different scheme perform:

• Option 1 (Growth): End of two year i get 75 per share or my investment is Rs 3500/-. I sell all my shares and get back my 3500.
  
• Option 2 (Dividend): After the dividend my MF value is 50/- (as 50 was given in first year) in dividend option. I have 2500 as dividend tax free. It gets 5% interest from bank (after catering to Income Tax) and after one year it is 2500+125= 2625/-. On second year, as in growth option my value tanks by 25%. SO it is now Rs 37.5. I have already 2625 in bank. so i need the to sell 24 shares to get the remaining 900/-. So i am still left with 975 rupees (in my mutual fund even after meeting my exigencies) which again can go up.
• Option 3 (Dividend reinvestment option): The 50 i got in dividend is reinvested at 50 per share. so i get additional 48 shares (taking care of entry load of 2.25%). so in total i have 98 shares @ Rs 50 in year 1. Now in Year 2 when i sell as i mentioned earlier market tanked by 25% and share value is 37.5. so to get 3500 for my exigencies i sell 94 shares which is worth 3525/-. So now i have 4 shares with value 150. So advantage over option 1 is i made 175 (25 in cash and 150 worth stock which can go up in future)
  

Assuming the probability that your exigencies fall during the same time when market tank is a higly correlated event, you can now see why a dividend investment is best. If things were good all three options are equally good with an edge for dividend option as now you do not have any capital gain!!

So till rules of the game change, i will bet on dividend option for Equity.