How to calculate the annual rate of return for an investment of less than one year's duration.

Interesting question. Did you actually receive an assignment where you have to do this, or are you just asking?

This could be simple or complicated, depending on what you really need to do. The actual rate is going to be the return divided by the invested amount. But you'll end up with a return for less than one year. Let's say you get 7% and it's for 9 months. I don't know what is the easiest way for you to work that out, but me, I'd take the .07, divide by the 9 months (giving me the amt for 1 month) and then multiply by 12 for the full year. Or work 9/12 out to a decimal (.75) and take .07 and divide by that number. At any rate, that would get you 9.33% for a year rate.

But this is using the concept of no compounding. Since I don't know exactly what you're doing, I can't really say about that. If it's a straight-forward annual rate, then the above should work.

If the initial cost of an investment is £10 mil with annual rental of £1m, annual maintenance of £100,000. Over 3yrs with nominal rate of interest of 5% and annual rate of inflation at 2%. How would you work out the annual rate of return? And also the real rate of return after allowing for inflation. I am stuck please help.

Please start your own thread for your question instead of tacking it onto a year-old thread.

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