rate of return
The rate of return of this investment is a compound interest rate, compounded at every unit time period, such that the net present value of the investment is . In other words, if , as a real number, exists, it satisfies the following equation:
We typically assume that , and, in most situations, that they are integers, so that the equation is a polynomial equation.
However, there is no guarantee that exists, and if it exists, that it is unique.
Nevertheless, one can usually, by trial-and-error, determine if such an exists. If exists, and if are all non-negative, then by Descartes’ rule of signs (http://planetmath.org/DescartesRuleOfSigns), is always unique and .
|Title||rate of return|
|Date of creation||2013-03-22 16:41:05|
|Last modified on||2013-03-22 16:41:05|
|Last modified by||CWoo (3771)|