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How to Calculate Annual Rate of Return.
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How to Calculate Annual Rate of Return.

Rosemary Njeri

Annual rate of return (ARR) is a way of calculating investment returns on an annual basis.

ARR is used mainly as a general comparison between multiple projects to determine the expected rate of return from each project.

Formula to calculate annual rate of return.

 Calculate Annual Rate of Return.

Example:

Suppose the beginning value of an investment was $ 300,000 and its current value is $500,000. If the investment was to last for 5 years, calculate the annual rate of return.

 Calculate Annual Rate of Return.

Thus, the annual rate of return is 10.6%.

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