You are a fixed term interest rate portfolio manager and have been advised that cash inflows for the fund are expected to be, $15 million now; a further $25 million is to be added to the initial...

You are a fixed term interest rate portfolio manager and have been advised that cash inflows for the fund are expected to be, $15 million now; a further $25 million is to be added to the initial investment in one years’ time, followed by a further $10 million at the beginning of the next year. These investments are made annually at the beginning of each successive year. The market is expected to provide annual returns of 7.5%, 1.5%, 5.5%% for each successive year.

A. Calculate the annualised Time Weighted Rate of Return (TWRR) and the Money Weighted Rate of Return (MWRR) provided over the three-year term

B. What do these calculations tell you about the timing of the investment decisions?