# Rate of Return Calculator

LAST UPDATE: May 14th, 2018

### What is a Rate of Return?

The rate of return is a financial calculation used when determining the time value of money to determine the interest rate that a flow of money compounds at each time period.
It takes into consideration a value at the moment (present value) as well as at a time in the future (future value) as well any payments regularly occurring each compounding period.
As this calculator is structured to parallel the results of a financial calculator, inputs and outputs will be similar – for example, a negative present value (or payment) means an outflow as opposed to a directly negative number.

### How is the Rate of Return calculated?

The rate of return is calculated through a financial formula used to determine the time value of money.

### What is Present Value?

Future Value (FV) is the total value at the end of the time period.

### What is Future Value?

Future Value (FV) is the total value at the end of the time period.

### What are periods?

Periods are the number of times that compounding (and payments) take place.

### What is Payment (PMT)?

A payment is an amount either deposited or withdrawn at each compounding period. A negative number designates an amount that is deposited, while a positive one withdrawn. For example, if \$100 is deposited each compounding period, it would be entered as '-100', while if \$75 was payed out each compounding period, it would be entered as '75'.

### What are Payments at start or end of a period?

A payment at the beginning of a period would mean that the payment (or deposit) occurs at the beginning of each period. A payment at the end of a period would mean that the payment (or deposit) occurs at the end of each period.