Assistance needed (Please show work-attempting to use a HP 10bII+ calculator to
ID: 2740251 • Letter: A
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Assistance needed (Please show work-attempting to use a HP 10bII+ calculator to solve the problem) Use the information provided in the table below to calculate the weighted-average before-and-after tax rate of return of this portfolio.
Rate of Return Rate of Return Asset Allocation Amount Before Tax After Tax Fund A Large Growth $75,000 9% 6.75% Fund B Mid-Value $100,00 8% 6% Fund C Money Market $94,000 2% 1.50% Fund D Small Growth $14,000 12% 9% Fund E Small Value $35,000 4% 3% Fund F High quality bond $45,000 3% 2,25% Fund G Low quality bond $112.000 5% 3.75%Explanation / Answer
Calculate the weighted –average before tax rate of return of this portfolio:
Asset
Allocation
Amount
Weights
Rate of Return
Before Tax
Weighted
average
rate of return
Fund A
Large Growth
$ 75,000
19.48
9%
1.7532
Fund B
Mid-Value
$10,000
2.60
8%
0.208
Fund C
Money Market
$ 94,000
24.42
2%
0.4884
Fund D
Small Growth
$ 14,000
3.64
12%
0.4368
Fund E
Small Value
$ 35,000
9.09
4%
0.3636
Fund F
High quality bond
$ 45,000
11.69
3%
0.3507
Fund G
Low quality bond
$ 112,000
29.09
5%
1.4545
Total portfolio
$ 385,000
100.00
5.0552
Therefore, rate of return before tax is 5.0552%.
Calculate the weighted –average after tax rate of return of this portfolio:
Asset
Allocation
Amount
Weightage
Rate of return
After Tax
Weighted
average
rate of return
Fund A
Large Growth
$ 75,000
19.48
6.75%
1.3149
Fund B
Mid-Value
$10,000
2.60
6%
0.156
Fund C
Money Market
$ 94,000
24.42
1.50%
0.3663
Fund D
Small Growth
$ 14,000
3.64
9%
0.3276
Fund E
Small Value
$ 35,000
9.09
3%
0.2727
Fund F
High quality bond
$ 45,000
11.69
2,25%
0.263025
Fund G
Low quality bond
$ 112,000
29.09
3.75%
1.090875
Total portfolio
$ 385,000
100.00
3.7914
Therefore, rate of return after tax is 3.7914%.
Asset
Allocation
Amount
Weights
Rate of Return
Before Tax
Weighted
average
rate of return
Fund A
Large Growth
$ 75,000
19.48
9%
1.7532
Fund B
Mid-Value
$10,000
2.60
8%
0.208
Fund C
Money Market
$ 94,000
24.42
2%
0.4884
Fund D
Small Growth
$ 14,000
3.64
12%
0.4368
Fund E
Small Value
$ 35,000
9.09
4%
0.3636
Fund F
High quality bond
$ 45,000
11.69
3%
0.3507
Fund G
Low quality bond
$ 112,000
29.09
5%
1.4545
Total portfolio
$ 385,000
100.00
5.0552
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