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Problem 34.18 Dr. Fin.

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  • Problem 34.18 Dr. Fin.

    On January 1, 1997 an investment account is worth 100,000. On April 1, 1997 the value has
    increased to 103,000 and 8,000 is withdrawn. On January 1, 1999 the account is worth 103,992.
    Assuming a dollar weighted method for 1997 and a time weighted method for 1998 the annual
    effective interest rate was equal to x for both 1997 and 1998. Calculate x

    So basically in 1998 there was no deposits for withdrawals therefore time weighted method is equal to dollar weighted method. Am I right? Anyway after I used dollar weighted method for 2 years, I got 6.24% for the result but answer in the book is 6.22. Can someone tell me what I did wrong here. Thank you.