Rate of return: Difference between revisions

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imported>Doug Williamson
(Increase decimal places in solution.)
imported>Doug Williamson
(Align intermediate working.)
Line 26: Line 26:
= <math>\frac{1.03}{1}</math> - 1
= <math>\frac{1.03}{1}</math> - 1


= 0.03
= 0.0300


= '''3.00%'''
= '''3.00%'''

Revision as of 13:49, 17 November 2015

The investor's return on an investment, expressed as a proportion of the amount invested.

Most commonly expressed as a percentage.


Example

GBP 1 million is invested.

GBP 1.03 million is repayable at the end of the period.


The periodic rate of return (r) is:

r = (End amount / Start amount) - 1

Which can also be expressed as:

r = (End / Start) - 1

or

r = <math>\frac{End}{Start}</math> - 1


= <math>\frac{1.03}{1}</math> - 1

= 0.0300

= 3.00%


See also