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

Rosemary Njeri

A rate of return (RoR) is the net gain or loss of an investment over a specified time period, expressed as a percentage of the investment’s initial cost.

Since RoR is a measure of the profitability of any form of investment, it is used by varied investors.

Formula to calculate rate of return.

Calculate Rate of Return.

Example:

If the initial cost of investment was $10,000 and the ending value of the same investment after a few years was $ 18,000. calculate the rate of return.

Calculate Rate of Return.

Thus, the rate of return is 44.4%.

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