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Return on a Lump-Sum Investment
Determines the actual annual return of a lump-sum investment from its starting and ending value.
Type values, assign them with the value keys and press "Solve". It is the same financial calculator as under "Calculator" in the menu above.
Examples for this calculator
Each example is a story with explanation and a "what you learn" takeaway.
Formula
i = (FV/K0)^(1/n) − 1
How the formula works
Extracting the return from the starting and ending value means taking the n-th root of the ratio: i = (FV/K₀)^(1/n) − 1. The root spreads the total gain evenly across all years – that is the true average return, not the naive total gain divided by the years.
Internal rate of a lump-sum investment, output as the effective rate.
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