A development finance specialist wants to evaluate annualized return of a certain investment portfolio.

A development finance specialist wants to evaluate annualized return of a certain investment portfolio. The following information is given; Y0: purchase one share of FNB_Namibia for NAD65.40 Y1: purchase another share of FNB_ Namibia for NAD68.12 Y1: received a dividend on the first share of NAD0.75 Y2: purchase another share of FNB-Namibia for NAD75.95 Y2: received a dividend on the second share of NAD0.77 Y3: sell 3 shares for $82.76 per share Where Y=year, calculate the time-weighted rate of return on this portfolio? [5]

Expert Solution

To calculate the return on the portfolio we have to calculate the IRR (internal rate of return).

IRR is the rate of return at which NPV is 0, so using NPV formula and equating it with 0 we can calulcate the IRR

Ans. 9.35%

Formula:

Working:

jeff jeffy answered 2 years ago

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A development finance specialist wants to evaluate annualized return of a certain investment portfolio.

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