If the beginning value of a fund is $10 million.
at the end of year 1:
it pays off dividend $500,000
share holder withdraws $2 million
the rate of return on the fund in year 1 is 10%
at the end of year 2:
it pays off dividend $400,000
the market value of the fund is $9 million
the rate of return of year 2 is 11.%
It requires to calculate IRR. But my question is that, when I input cash flows in my calculator, do I need to calculate each year’s return?
say in the end of year 1, do I need to input +1 million, which is equal to $10 million*10%. why?