Rate of Return Calculator
Definition – What is a Rate of Return?
Rate of return (RoR) is the rate that a financial stream gains or loses over time. It is listed as a percentage and usually calculated as a decimal.
In terms of time value of money, rate of return is always calculated over the compounding period. It is not necessarily an annual rate.
Formula – How is Rate of Return is calculated
We do not not have a specific formula for rate of return.
This calculator computes rate of return by guessing a rate of return and calculating a present value using the rest of the data to check if the result is accurate. It then tries a different rate of return until it finds a match to the present value.
All rates of return in this calculator should be tested against a present value, future value, or payment calculator to double-check the results.
The test upper-bounds of the calculator are 11% and the lower bounds are -1%.
The rate of return is listed as the rate for each compounding period. It is only an annualized rate if the compounding period is an annual one.