Strubeck Corporation sponsors a pension plan for its employees. It manages part of the equity portfolio in-house and delegates management of the balance to Super Trust Company. As chief investment officer of Strubeck, you want to review the performance of the in-house and Super Trust portfolios over the last four quarters. You have arranged for outflows and inflows to the portfolios to be made at the very beginning of the quarter. Exhibit 14 summarizes the inflows and outflows as well as the two portfolios’ valuations. In Exhibit 11, the ending value is the portfolio’s value just prior to the cash inflow or outflow at the beginning of the quarter. The amount invested is the amount each portfolio manager is responsible for investing. 

1. Calculate the time-weighted rate of return for the in-house account. 

2. Calculate the time-weighted rate of return for the Super Trust account. 

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Exhibit 14: Cash Flows for the In-House Strubeck Account and the Super Trust Account (US dollars) Panel A: In-House Account Beginning value Beginning of period inflow (outflow) Amount invested Ending value Panel B: Super Trust Account Beginning value Beginning of period inflow (outflow) Amount invested Ending value 1 4,000,000 2 Quarter 3 6,000,000 5,775,000 4 6,720,000 1,000,000 (500,000) 225,000 (600,000) 5,000,000 5,500,000 6,000,000 6,120,000 6,000,000 5,775,000 6,720,000 5,508,000 10,000,000 13,200,000 12,240,000 5,659,200 2,000,000 (1,200,000) (7,000,000) (400,000) 12,000,000 12,000,000 5,240,000 5,259,200 13,200,000 12,240,000 5,659,200 5,469,568