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Depends how you are calculating return. Typically, NPV (net present value) is the most comprehensive measure of the value of an investment, which is the sum of all discounted cash flows generated by the investment:
CF(0) + CF(1)/(1+r)^1 + CF(2)/(1+r)^2 + ... + CF(n)/(r+r)^n
Where CF(n) is the cash flow at the end of year (or period) n, and r is the discount rate (determined by the cost of capital of the investment). Note, NPV should also take into consideration the opportunity cost of the investment (that is, any cash flow foregone by pursuing the current investment as opposed to other alternative uses of the cash). The discount rate should be a measure of the risk associated with the cash flow, and, as mentioned, the cost of capital.
IRR (internal rate of return) is another common measure of return on investments, but there are additional caveats with this analysis (it does not take into consideration the scale of the investment, and it does not work for certain sets of cash flows, such as when there are alternating positive and negative cash flow). It is usually benchmarked against some other measure, such as a hurdle rate, to determine whether an investment is profitable.
What else can I help you with?
What is the calculation for the daily return of an investment?
The calculation for the daily return of an investment is: (Ending Value - Beginning Value) / Beginning Value.
Is the interest earn t in a bank account classed as an investment?
Interest earned in a bank account is not an investment. It is considered an income. The money that you have in the bank account that earned the interest for you is considered the investment
The amount or percentage earned on an investment?
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What is the calculation for determining odd days interest on a loan or investment?
The calculation for determining odd days interest on a loan or investment is: Principal amount x Interest rate x Number of odd days / 365
What is the money earned from investments called?
The money earned from investment is called as return on investment. if you invest in shares then it will be treated as dividend, if it in debentures then it will be known as interest. so different investment reuturns will have different names.
Return On Investment - ROI formula?
There are so many variables but simply put It is Money Earned-Investment/Investment=ROI
What is the journal entry for investment revenue of 6000 was earned and received?
debit cashcredit interest on investment
Last year a 10000.00 investment in fund b earned 920.00 while fund a earned twice as much as fund b fund c earned 20 percent more than fund a how much interest was earned on a 6000.00 investment in c?
$1324.80
Are wages included in the calculation of GDP?
Yes, wages are included in the calculation of GDP as they represent the total income earned by individuals in an economy from their work.
What is the Calculation of Earned Leave in aspect of Bangladesh Labor Law-2006?
120
What is included in the calculation of investment GDP?
Investment GDP includes spending on business equipment, structures, and residential construction. It also includes changes in business inventories.
How much interest is earned on the account?
A $5000 investment at an annual simple interest rate of 4.4% earned as much interest after one year as another investment in an account that earned 5.5% annual simple interest. How much was invested at 5.5%?
