What two primary components are used to measure the rate of return acheived from an investment?

Question

Evangeline Madden

Engineering

19 April, 11:00

What two primary components are used to measure the rate of return acheived from an investment?

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Answers (1)

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Eric Zavala · Answer 1

Income and appreciation

Explanation:

The internal rate of return, also known by other names such as The rate of return (TR), Internal rate of return (IRR), return on investment (RSI) and rate of return (IR), just to name a few, is the rate to be paid on the unpaid balance of the money obtained on loan or the rate earned on the balance not recovered from an investment, so that the final payment equals the balance exactly to zero with the interest considered. The interest rate of return is calculated by means of an equation based on the present value and / or annual value, which some precautions must be taken to avoid making mistakes in the calculation. There is also a maximum number of possible interest rates for a series of specific cash flows. A compound rate of return is also calculated using a given investment rate. As well as a nominal and effective interest rate for a bond investment.

So it could be said that to determine the return on investment, several factors are taken into account, but mainly income and appreciation.