Adequate information: Opening value of saving 1,48,000 Closing value of saving 1,98,000 To compute: Dollar weighted average return. Introduction: Dollar weighted average return is a way to measure an investment’s performance. IRR is the rate where present value of inflow and present value of outflow are equal.

Question

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Answer 1

Question

Chapter 24, Problem 1PS

Summary Introduction

Adequate information:

Opening value of saving 1,48,000

Closing value of saving 1,98,000

To compute: Dollar weighted average return.

Introduction: Dollar weighted average return is a way to measure an investment’s performance. IRR is the rate where present value of inflow and present value of outflow are equal.

Expert Solution & Answer

Explanation of Solution

Assuming that an investment was made for $148,000.

Thus, all the values in addition and investment in account are considered as outflow of cash flow and all the values of withdrawal and final value are considered as inflow of cash.

PV of inflow = PV of outflow

$23000(1+r)15 + 198000(1+r)17 = 148000+2500+4000(1+r)3+1500(1+r)7+13460(1+r)12+3000(1+r)16$

IRR can be computed using the following formula in excel:

EBK INVESTMENTS, Chapter 24, Problem 1PS , additional homework tip 1

Following is the calculated answer using the above mentioned formula:

EBK INVESTMENTS, Chapter 24, Problem 1PS , additional homework tip 2

The above return has been calculated on monthly basis.

So, as per the question the dollar weighted average return between first and last date can be calculated by multiplying it by 17 (1/1/2016-5/3/2017)

$1.6073%×17 =27.32%$

Conclusion

Dollar weight average return is 27.32%

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Answer 2

Question

Chapter 24, Problem 1PS

Summary Introduction

Adequate information:

Opening value of saving 1,48,000

Closing value of saving 1,98,000

To compute: Dollar weighted average return.

Introduction: Dollar weighted average return is a way to measure an investment’s performance. IRR is the rate where present value of inflow and present value of outflow are equal.

Expert Solution & Answer

Explanation of Solution

Assuming that an investment was made for $148,000.

Thus, all the values in addition and investment in account are considered as outflow of cash flow and all the values of withdrawal and final value are considered as inflow of cash.

PV of inflow = PV of outflow

$23000(1+r)15 + 198000(1+r)17 = 148000+2500+4000(1+r)3+1500(1+r)7+13460(1+r)12+3000(1+r)16$

IRR can be computed using the following formula in excel:

EBK INVESTMENTS, Chapter 24, Problem 1PS , additional homework tip 1

Following is the calculated answer using the above mentioned formula:

EBK INVESTMENTS, Chapter 24, Problem 1PS , additional homework tip 2

The above return has been calculated on monthly basis.

So, as per the question the dollar weighted average return between first and last date can be calculated by multiplying it by 17 (1/1/2016-5/3/2017)

$1.6073%×17 =27.32%$

Conclusion

Dollar weight average return is 27.32%

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 24, Problem 1PS

Summary Introduction

Adequate information:

Opening value of saving 1,48,000

Closing value of saving 1,98,000

To compute: Dollar weighted average return.

Introduction: Dollar weighted average return is a way to measure an investment’s performance. IRR is the rate where present value of inflow and present value of outflow are equal.

Expert Solution & Answer

Explanation of Solution

Assuming that an investment was made for $148,000.

Thus, all the values in addition and investment in account are considered as outflow of cash flow and all the values of withdrawal and final value are considered as inflow of cash.

PV of inflow = PV of outflow

$23000(1+r)15 + 198000(1+r)17 = 148000+2500+4000(1+r)3+1500(1+r)7+13460(1+r)12+3000(1+r)16$

IRR can be computed using the following formula in excel:

EBK INVESTMENTS, Chapter 24, Problem 1PS , additional homework tip 1

Following is the calculated answer using the above mentioned formula:

EBK INVESTMENTS, Chapter 24, Problem 1PS , additional homework tip 2

The above return has been calculated on monthly basis.

So, as per the question the dollar weighted average return between first and last date can be calculated by multiplying it by 17 (1/1/2016-5/3/2017)

$1.6073%×17 =27.32%$

Conclusion

Dollar weight average return is 27.32%

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 24, Problem 1PS

Summary Introduction

Adequate information:

Opening value of saving 1,48,000

Closing value of saving 1,98,000

To compute: Dollar weighted average return.

Introduction: Dollar weighted average return is a way to measure an investment’s performance. IRR is the rate where present value of inflow and present value of outflow are equal.

Expert Solution & Answer

Explanation of Solution

Assuming that an investment was made for $148,000.

Thus, all the values in addition and investment in account are considered as outflow of cash flow and all the values of withdrawal and final value are considered as inflow of cash.

PV of inflow = PV of outflow

$23000(1+r)15 + 198000(1+r)17 = 148000+2500+4000(1+r)3+1500(1+r)7+13460(1+r)12+3000(1+r)16$

IRR can be computed using the following formula in excel:

EBK INVESTMENTS, Chapter 24, Problem 1PS , additional homework tip 1

Following is the calculated answer using the above mentioned formula:

EBK INVESTMENTS, Chapter 24, Problem 1PS , additional homework tip 2

The above return has been calculated on monthly basis.

So, as per the question the dollar weighted average return between first and last date can be calculated by multiplying it by 17 (1/1/2016-5/3/2017)

$1.6073%×17 =27.32%$

Conclusion

Dollar weight average return is 27.32%

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 24, Problem 1PS

Summary Introduction

Adequate information:

Opening value of saving 1,48,000

Closing value of saving 1,98,000

To compute: Dollar weighted average return.

Introduction: Dollar weighted average return is a way to measure an investment’s performance. IRR is the rate where present value of inflow and present value of outflow are equal.

Expert Solution & Answer

Explanation of Solution

Assuming that an investment was made for $148,000.

Thus, all the values in addition and investment in account are considered as outflow of cash flow and all the values of withdrawal and final value are considered as inflow of cash.

PV of inflow = PV of outflow

$23000(1+r)15 + 198000(1+r)17 = 148000+2500+4000(1+r)3+1500(1+r)7+13460(1+r)12+3000(1+r)16$

IRR can be computed using the following formula in excel:

EBK INVESTMENTS, Chapter 24, Problem 1PS , additional homework tip 1

Following is the calculated answer using the above mentioned formula:

EBK INVESTMENTS, Chapter 24, Problem 1PS , additional homework tip 2

The above return has been calculated on monthly basis.

So, as per the question the dollar weighted average return between first and last date can be calculated by multiplying it by 17 (1/1/2016-5/3/2017)

$1.6073%×17 =27.32%$

Conclusion

Dollar weight average return is 27.32%

Answer 6

Chapter 24, Problem 1PS

Summary Introduction

Adequate information:

Opening value of saving 1,48,000

Closing value of saving 1,98,000

To compute: Dollar weighted average return.

Introduction: Dollar weighted average return is a way to measure an investment’s performance. IRR is the rate where present value of inflow and present value of outflow are equal.

Expert Solution & Answer

Explanation of Solution

Assuming that an investment was made for $148,000.

Thus, all the values in addition and investment in account are considered as outflow of cash flow and all the values of withdrawal and final value are considered as inflow of cash.

PV of inflow = PV of outflow

$23000(1+r)15 + 198000(1+r)17 = 148000+2500+4000(1+r)3+1500(1+r)7+13460(1+r)12+3000(1+r)16$

IRR can be computed using the following formula in excel:

EBK INVESTMENTS, Chapter 24, Problem 1PS , additional homework tip 1

Following is the calculated answer using the above mentioned formula:

EBK INVESTMENTS, Chapter 24, Problem 1PS , additional homework tip 2

The above return has been calculated on monthly basis.

So, as per the question the dollar weighted average return between first and last date can be calculated by multiplying it by 17 (1/1/2016-5/3/2017)

$1.6073%×17 =27.32%$

Conclusion

Dollar weight average return is 27.32%

Answer 7

Chapter 24, Problem 1PS

Summary Introduction

Adequate information:

Opening value of saving 1,48,000

Closing value of saving 1,98,000

To compute: Dollar weighted average return.

Introduction: Dollar weighted average return is a way to measure an investment’s performance. IRR is the rate where present value of inflow and present value of outflow are equal.

Answer 8

Expert Solution & Answer

Explanation of Solution

Assuming that an investment was made for $148,000.

Thus, all the values in addition and investment in account are considered as outflow of cash flow and all the values of withdrawal and final value are considered as inflow of cash.

PV of inflow = PV of outflow

$23000(1+r)15 + 198000(1+r)17 = 148000+2500+4000(1+r)3+1500(1+r)7+13460(1+r)12+3000(1+r)16$