Question

2000 is deposited into a newly opened fund on January 1, 1999. Another deposit is made into the fund on July, 1 1999. On January 1, 2000, the balance in the fund is 6000. The time-weighted rate of return in 1999 is 8.0% and the dollar-weighted rate of return is 4.8%. Calculate the balance of the fund on July 1, 1999, immediately before the deposit is made. Give your answer rounded to the nearest whole number.

Answer 1

Answer:

$2,080 is the correct answer to the given question .

Explanation:

As mention in the question the deposited  amount of $2000 was in the year the July, 1, 1999 up to the on the January 1, 2000 it means it takes 1/2 year or 6 months.

Time-weighted rate of the return in the year 1999 is the 8.0%

however it has been spent for the six months, it means the 4% in the 6 month

So the cost of the fund before the investment can be determined by

= $2000*1.04$

= $2080

Therefore the balance of the fund on the year July 1, 1999= $2080