Tom decides to begin investing some portion of his annual bonus,beginning this year with $6,000.In the first year he earns a 8% return and adds $3,000 to his investment.In the second his portfolio loses 4% but,sticking to his plan,he adds $1,000 to his portfolio.In this year his portfolio returns 2%.What is Tom's dollar-weighted average return on his investments?
A)0.34 percent
B)1.20 percent
C)1.54 percent
D)2.23 percent
E)2.58 percent

Question

Quizplus · Accepted Answer

Using the CashFlow worksheet in a financial calculator, the cashflows to be entered are:CF0 = -6000CF1 = -3000CF2 = -1000CF3 = ((((6000 * 1.08) + 3000)*.96) + 1000) * (1.02) = $10,302.82Solve for IRR = 1.20%

Tom Decides to Begin Investing Some Portion of His Annual