John began his investing program with a $5,500 initial investment. The table below recaps his returns...

John began his investing program with a $5,500 initial investment. The table below recaps his returns each year as well as the amounts he added to his investment account. What is his dollar-weighted average return?

Time	Investment		Return
0	$	5,500		8.5	%
1	$	2,000	-	5.0	%
2	$	2,600		4.5	%
3	$	3,000		9.0	%
4	$	900	-	2.5	%

A-1.8 percent

B-1.5 percent

C-2.6 percent

D-2.0 percent

E-2.2 percent

Expert Solution

Time	Investment	Cummulative Investment	Return	$ Return
0	5,500	5,500.00	8.50%	467.50
1	2,000	7,967.50	-5.00%	- 398.38
2	2,600	10,169.13	4.50%	457.61
3	3,000	13,626.74	9.00%	1,226.41
4	900	15,753.14	-2.50%	- 393.83
		53,016.50		1,359.31

dollar-weighted average return = 1359.31 / 53016.50 = 2.56% ~2.6%

jeff jeffy answered 1 year ago

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