Bill Has Been Adding Funds to His Investment Account Each

Multiple Choice

Bill has been adding funds to his investment account each year for the past 3 years. He started with an initial investment of $1,000. After earning a 10 percent return the first year, he added $3,000 to his portfolio, but his investments lost 5 percent. Undeterred, Bill added $2,000 the next year and earned a 2 percent return. Last year, discouraged by the recent results, he only added $500 to his portfolio, but in this final year his investments earned 8 percent. What was Bill's dollar-weighted average return for his investments?

A) 1.5%
B) 2.0%
C) 2.5%
D) 3.0%
E) 3.5%