Time Weighted Rate of Interest

If you want to calculate the time weighted rate of interest return, use this calculator.  The calculator is setup to handle a 2 event year based on asset values.  The formula for this is:

[(AV2/AV1) * (AV3/(AV2 + C1 - W1)) * (AV4/(AV3 + C2 - W2))] - 1

Example:  You are given an asset worth 100,000 on January 1.  On March 1, the value has increased to 112,000.  Immediately after, a 30,000 contribution is made.  On August 1, the value of the fund is 125,000.  Immediately after, 42,000 is withdrawn.  January 1 of the following year, the asset is valued at 100,000.  Calculate the time weighted value of interest.

You would enter the following in the calculator:

Enter Asset Value 1 = 100,000

Enter Contribution Value 1 = 30,000

Enter Withdrawal Value 1 = 0

Enter Asset Value 2 = 112,000

Enter Contribution Value 2 = 0

Enter Withdrawal Value 2 = 42,000

Enter Asset Value 3 = 125,000

Enter Asset Value 4 = 100,000

Press Calculate and your answer is 18.78%