Use =IRR to calculate or need the exact answer.... solution on this website are

Question

Use =IRR to calculate or need the exact answer.... solution on this website are incorrect, so please do not copy paste.

A household (HH) savings-account spreadsheet shows the following entries:

Calculate the dollar-weighted average return on the HH savings account between the first and final dates.(Round your answer to 2 decimal places. Omit the "%" sign in your response.)

date additions withdrawals value 1/1/10 148000 1/3/10 2500 3/20/10 4000 7/5/10 1500 12/2/10 13460 3/10/11 23000 4/7/11 3000 5/3/11 198000

Explanation / Answer

Dollar-Weighted average return is the internal rate of return of investment. To calculate this, every addition to the initial value is treated as negative cash flow (Cash outflow) and every withdrawal is treated as positive cash flow (Cash inflow).

You can calculate it using IRR function in excel. The treatment of values are given in below table:

$198,000.00

IRR = 4%

The final amount is treated as cash inflow as no additional deposits are done and this amount is more likely to be withdrawan.

-$148,000.00 -$2,500.00 -$4,000.00 -$1,500.00 -$13,640.00 $23,000.00 -$3,000.00

$198,000.00

Related Questions

Navigate

• Browse (All)
• Browse U
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.