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Return on a Savings Plan
Iteratively determines the annual return of a regular savings plan (optionally with starting capital) that leads to a known final value – ideal for comparing insurance policies.
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
Iterative: i_eff such that K0·q^n + R·(q^n−1)/(q−1) = FV
How the formula works
With a savings plan the rate cannot be solved directly because it appears in several places of the formula. The calculator tries it iteratively until the deposits and target value match exactly (internal rate of return). This is how, for example, the true return of an insurance policy becomes visible.
Internal rate of a savings plan; iterative solution, output as the effective rate.
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