Personal Rate of Return Calculator

Calculate Personal Rate of Return (R)





Formula

The formula to calculate the Personal Rate of Return (R) is:

\[ R = \left( \frac{V_f}{V_i} \right)^{\frac{1}{n}} - 1 \]

Where:

Definition

Example

Let's say the final value of the investment (Vf) is $1500, the initial value of the investment (Vi) is $1000, and the total number of years (n) is 5. Using the formula:

\[ R = \left( \frac{1500}{1000} \right)^{\frac{1}{5}} - 1 = 1.5^{0.2} - 1 \approx 0.08447 \]

So, the personal rate of return is approximately 8.45%.