An investment fund contains £100,000 at time zero. After six months its value has grown to £105,000 and further £10,000 are added. At the end of the year the fund is worth £125,000. In the first six months of the second year its value grows to £126,000 and at the end of the year it is worth £128,000. At that point £50,000 are withdrawn. At the end of the following six months the fund’s value is £80,000 and the fund is liquidated a)In which semester did the fund have its best performance? (To avoid any confusion we notice that a ‘semester’ is a 6-month period.) b)Compute the time-weighted rate of return per semester.

An investment fund contains £100,000 at time zero. After six months its value has grown to £105,000 and further £10,000 are added. At the end of the year the fund is worth £125,000. In the first six months of the second year its value grows to £126,000 and at the end of the year it is worth £128,000. At that point £50,000 are withdrawn. At the end of the following six months the fund’s value is £80,000 and the fund is liquidated a)In which semester did the fund have its best performance? (To avoid any confusion we notice that a ‘semester’ is a 6-month period.) b)Compute the time-weighted rate of return per semester.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

ChapterM: Time Value Of Money Module

Section: Chapter Questions

Problem 9RE

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