The annualized rate of return is a tool used to measure the gains or losses from an investment on a yearly basis. It is computed as the compoun
Question
The annualized rate of return is a tool used to measure the gains or losses from an investment on a yearly basis. It is computed as the compoun
Solution
It seems like your message got cut off. However, I can explain how to calculate the annualized rate of return.
The annualized rate of return is calculated using the following formula:
Annualized Rate of Return = ((Ending value of investment / Beginning value of investment) ^ (1 / Number of years)) - 1
Here are the steps to calculate it:
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Determine the ending value of the investment. This is the current value or the value at the end of the period you are considering.
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Determine the beginning value of the investment. This is the initial amount invested or the value at the start of the period.
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Divide the ending value by the beginning value.
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Raise the result to the power of 1 divided by the number of years.
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Subtract 1 from the result.
The result is the annualized rate of return, expressed as a decimal. To convert it to a percentage, multiply by 100.
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