XYZ stock price and dividend history are as follows:

Year Beginning-of-Year Price Dividend Paid at Year-End

2010 $ 122 $ 5

2011 $ 132 $ 5

2012 $ 110 $ 5

2013 $ 115 $ 5

An investor buys six shares of XYZ at the beginning of 2010, buys another two shares at the beginning of 2011, sells one share at the beginning of 2012, and sells all seven remaining shares at the beginning of 2013.

a. What are the arithmetic and geometric average time-weighted rates of return for the investor?

b-1. Prepare a chart of cash flows for the four dates corresponding to the turns of the year for January 1, 2010, to January 1, 2013.

b-2. What is the dollar-weighted rate of return? (Hint: If your calculator cannot calculate internal rate of return, you will have to use a spreadsheet or trial and error.)

Please show steps to reach solution