Jim began his investing program with a $4050 initial investment.The table below recaps his returns each year as well as the amounts he added to his investment account.What is his dollar-weighted average return?
A)1.5 percent
B)1.8 percent
C)2.0 percent
D)2.2 percent
E)2.5 percent

Question

Jim began his investing program with a $4050 initial investment.The table below recaps his returns each year as well as the amounts he added to his investment account.What is his dollar-weighted average return? 
A)1.5 percent 
B)1.8 percent 
C)2.0 percent 
D)2.2 percent 
E)2.5 percent

Quizplus · Accepted Answer

Using the CashFlow worksheet in a financial calculator, the cashflows to be entered are:CF0 = -4500CF1 = -2500CF2 = -1000CF3 = -2000CF4 = -1000CF5 = 11836.18 (see calculations below)Solve for IRR = 2.0%4500 * (1.089) = 4900.50(4950 + 2500) * (.94) = 6956.47(6956.47 + 1000) * (1.045) = 8314.51(8314.51 + 2000) * (1.08) = 11139.67(11139.67 + 1000) * (.975) = 11836.18

Jim Began His Investing Program with a $4050 Initial Investment