Money Weighted Return with HP 12C



#5

Is there a way to use the HP 12C to calculate a Money Weighted Return with multiple cash flows?

Sample Situation:

1st of the Month Account Value = 1,000,000

5th Day of the Month: Addition to Account: $30,000

16th Day of Month: Addition to Account: $20,000

30th Day of Month (end of month): Value of Account = 1,080,000

How do you calculate the Money Weighted Return with the HP12C


I know the actual formula, and the results, which are:

1,080,000 = 1,000,000*(1+R))^30 + 30,000*(1+R)^25 + 20,000*(1+R)^14

R = .0009536

So, the monthly return = (1+.0009536)^30 - 1 = 2.90%


Just looking for a quicker easier way to do it with the calculator..

Thanks for any help


#6

Do you have the manual?

That would be the place to start.

#7

Clear your registers before beginning.

Set your calc to begin mode. To do this press blue key and Beg

key in -1000000 into CF0. To do this press 1000000 and press CHS (changes sign to minus) Press blue key and then CF0.

key in 0 into CFj. To do this press 0 and press blue key and press CFj.

key in 4 into Nj. To do this press 4 and press blue key and press Nj (this puts a value of 0 into cash flow 1 through 4).

key in -30000 into CFj. To do this press 30000 and press CHS (changes sign to minus) Press blue key and then press CFj

key in 0 into CFj. To do this press 0 and press blue key and press CFj.

key in 10 into Nj. To do this press 10 and press blue key and press Nj. (this puts a value of 0 into cash flow 6 through 15)

key in -20000 into CFj. To do this press 20000 and press CHS (changes sign to minus) Press blue key and then press CFj

key in 0 into CFj. To do this press 0 and press blue key and press CFj.

key in 13 into Nj. To do this press 13 and press blue key and press Nj. (this puts a value of 0 into cash flow 17 through 29)

key in 1080000 into CFj. To do this press 1080000 (do NOT change the sign) Press blue key and CFj.

Press gold key and irr. Multiply the answer by either 365 or 360 depending on whether you use a 360 or 365 day year.

I don't know if this is what you are looking for. Numerous web sites as well as the 12C owners manual give good explanations. Page 71 through 75 gives a pretty good explanation.

Best wishes

Don


#8

perfect... thanks..

i wasn't sure how to let the calculator know when the deposits occured and that it was a 30 day month...

though, since I was looking for the monthly performance, I took the resulting IRR .09536 and applied the following:

(1+.0009536)^30 = 2.90%

Dave


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