Money weighted rate of return
Mariah Hill buys one share of a stock for $50 on January 1, 2011. She buys an additional share on January 1, 2012 at $60. The stock paid a dividend of $3 per share at the end of each year. On January 1, 2013, she receives $150 for selling the two shares. What’s the money weighted rate of return?
The way my professor solved it:
CF0 = - 50, CF1 = - 57, CF2 = 156, CPT IRR = 28.60%
Why is CF1 = -57 and not -54? By the end of Y1 we have two shares that each paid $3 dividend … or is this context of CF1 = beginnig of year 1? In that case, the above was still solved using end mode..
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