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Up13
Hello:
I am enrolled in CIPM Level 1 and not as a Level 1 CFA candidate. I have been unable to come up with the right answer or enter it correctly in my BA II Plus calculator.
From the textbook, calculate the internal rate of return of a portfolio with following valuation points and external cash flow (where dollar amounts are in millions):
Market Value 31 March $56.3
Market Value (prior to cash flow) 11 April $58.2
Contribution (made at end of the day 11 April $9.8
Market Value 30 April $69.6
Solution: 69.6 = 56.3 x (1 + R) + 9.8 x (1 + R) 19/30 = 5.61% ((1 + R) is raised to 19/30 – I am not sure how to show it as an exponent)
Note: The mid-period valuation on April 11 is not necessary for completing the IRR calculation.
Thank you.
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Up4
So close! I repeated the same great strategy as above on my BAII and got the answer with a couple edits:
The F03 entry should just be 18, since there are 18 zeros after the 11th and prior to the 30th.
Then the IRR shown is 0.181949818%.
Once that is taken in gross to the 30th power, you get 1.05605
This leads to the IRR for the period as about 5.61%. Best of luck!!!
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Up4
Ah awesome, thanks for the help! F04 would be 1 of course, so F03 will have to be 18.
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Up3
I tried it in CF mode and got 5.41%. Not sure what I’m doing wrong…
CF0 = -56.3
C01 = 0
F01 = 10
C02 = -9.8
F02 = 1
C03 = 0
F03 = 19
C04 = 69.6
CPT IRR = 0.1757% (per day)
IRR (30 days) = (1.001757)^30 = 5.4%
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Up1
To show 19/30 as an exponent, you just press the “yˆx” button, then “(“, then “19/30”, then “)”, then “=”
Does this help?
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