Periodic yield: Difference between revisions
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imported>Doug Williamson (Generalise.) |
imported>Doug Williamson (Generalise Example 2 to cover investment.) |
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==Example 2== | ==Example 2== | ||
GBP 0.97 million is borrowed. | GBP 0.97 million is borrowed or invested. | ||
GBP 1.00 million is repayable at the end of the period. | GBP 1.00 million is repayable at the end of the period. | ||
Revision as of 11:21, 25 October 2015
A rate of return - or cost of borrowing - expressed as the proportion by which the amount at the end of the period exceeds the amount at the start.
Example 1
GBP 1 million is borrowed or invested.
GBP 1.03 million is repayable at the end of the period.
The periodic yield (r) is:
(End amount / start amount) - 1
= (1.03 / 1) - 1
= 0.03
= 3%
Example 2
GBP 0.97 million is borrowed or invested.
GBP 1.00 million is repayable at the end of the period.
The periodic yield (r) is:
(End amount / start amount) - 1
= (1.00 / 0.97) - 1
= 0.030928
= 3.0928%
