Annualized Rate of Return

Written by Jerry Ratzlaff on . Posted in Manufacturing Engineering

Annualized rate of return, abbreviated as AROR, is the equivalent annual return that an investor earns over the investment holding period.

 

annualized rate of return Formula

\(\large{ AROR = \left[ \frac{ IV \;+\; GL }{ IV } \right] ^ { \left(  \frac{ 1 }{ HP } \right) -1 }  }\)  

WHERE:

\(\large{ AROR }\) = annualized rate of return

\(\large{ GL }\) = gains or losses

\(\large{ HP }\) = holding period

\(\large{ IV }\) = initial value

 

Tags: Equations for Manufacturing