TIP: MWRR on BA II Plus

Although you are unlikley to see such a calculation on the exam, if you want to calculate MWRR on BA II Plus there is a cheap way.

Example:

Invest 900,000 at day 0

Invest 50, 000 at day 15

Get 1,466,553 on day 3

Use the cash flow worksheet, set CF0 to 900,000

Set CF1 to 0, and its frequency to 14

Set CF2 to 50,000 and its frequency to 1

Set CF3 to 0 and its frequency to 14

Set CF4 to -1,466,553 and its frequency to 1

The resulting MWRR is your daily MWRR, you would wont it for the total period so raise it to the power of 30 in this case. (1+r)^30

When the dates are split out equally like in this case, it would have been easier to just use CF1 and CF2, the result would be a 15 day MWRR, but if you get cashflows that are not even, ie day 7, 12, 19, then the method above will be your choice.

Good luck

this will not work if all the cash flows are inflows.

humm yes, since MWRR would be undefined in that case… if you put them all as + or as -, you clearly cant get a solution…

or did you mean something else?

yes that is what I meant.

and that method does not consider the final value that your portfolio had actually grown too as well.

you are better off doing an approximation using linear interpolation.

Plug and chug

I assumed that CF4 was the final valuation of the portfolio (as in if a full liquidation was done).

LostCFA when you said “Get 1,466,553 on day 3” you meant day 30 right?

If this is the case then there would be a negative amount all the time and this would work.

yeh ment day 30, its an example out of schweser.

just thought i would share it, so far this method has not failed me