Time-weighted return = (225 + 5 − 200) / 200 = 15%; (470 + 10 − 450) / 450 = 6.67%; [(1.15)(1.0667)]^1/2 − 1 = 10.8%

Money-weighted return: 200 + [225 / (1 + return)] = [5 / (1 + return)] + [480 / (1 + return)²]; money return = approximately 9.4%

Note that the easiest way to solve for the money-weighted return is to set up the equation and plug in the answer choices to find the discount rate that makes outflows equal to inflows.

Using the financial calculators to calculate the money-weighted return: (The following keystrokes assume that the financial memory registers are cleared of prior work.)

TI Business Analyst II Plus^®

• Enter CF₀: 200, +/-, Enter, down arrow
• Enter CF₁: 220, +/-, Enter, down arrow, down arrow
• Enter CF₂: 480, Enter, down arrow, down arrow, 
• Compute IRR: IRR, CPT
• Result:  9.39

HP 12C^®

• Enter CF₀: 200, CHS, g, CF₀
• Enter CF₁: 220, CHS, g, CF_j
• Enter CF₂: 480, g, CF_j 
• Compute IRR: f, IRR
• Result:  9.39