Please show the calculation sure so i can understand how you get the Answer A co
ID: 2769723 • Letter: P
Question
Please show the calculation sure so i can understand how you get the Answer
A company invests $1,000,000 at the beginning of the year. It adds another $250,000 at the end of the first quarter, withdraws $350,000 at the end of the second quarter, adds $145,000 at the end of the third quarter, and withdraws 450,000 of the remaining funds at the end of the year. It earns $20,000 of interest in the first quarter, $17,000 in the second quarter, $12,000 in the third quarter, and $29,000 in the fourth quarter. What is the annual effective rate earned on the investments portfolio? What rate of return would have been calculated if only looked at the ending portfolio value as compared with the beginning $1, 000,000 investment?Explanation / Answer
Answer: Total interest earned=20000+17000+12000+29000=78000
Average investment=12585000/12=1048,750
Annual effective rate=(78000/1048750)*100
=7.44%
Answer:b (1048750-1000000)/1000000
=4.875%
Quarter Investment No. of months remaining Average 1 1000000 3 3000000 2 1250000 3 3750000 3 900000 3 2700000 4 1045000 3 3135000 end of year 595000 0 0 12585000