Periodic discount rate: Difference between revisions
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imported>Doug Williamson (Create the page.) |
imported>Doug Williamson (Refine figures.) |
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==Example== | ==Example 1== | ||
GBP 1 million is borrowed. | GBP 1 million is borrowed. | ||
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= (1.03 - 1) - 1.03 | = (1.03 - 1) - 1.03 | ||
= 0. | = 0.029126 | ||
= 2. | = 2.9126% | ||
Revision as of 10:44, 25 October 2015
A rate of return - or cost of borrowing - expressed as:
- The excess of the amount at the end over the amount at the start
- Divided by the amount at the end
Example 1
GBP 1 million is borrowed.
GBP 1.03 million is repayable at the end of the period.
The periodic discount rate (d) is:
(End amount - start amount) / End amount
= (1.03 - 1) - 1.03
= 0.029126
= 2.9126%
