# Effective rate of return?

The nominal rate of return adjusted for more frequent calculations (compounding) than once per annum.

### What is effective interest rates?

effective interest rate the true rate of return considering all relevant financing expenses . Example: Abel borrows $10,000 on a one-year bank loan. He pays 2 discount points and a 7% face interest rate . He repays the loan at the end of the year, with interest. Since he really received only $9,800 at the start of the loan and repaid $10,700, the effective rate was greater than 7%. It was approximately 9.2%.

### What is formula for average rate of return?

Where Equals __ R Average rate of return Rt Return at time t T Number of time points Where Equals u Average rate of return Ri i-th return n Number of observations Where Equals __ R Average rate of return Rt Return at time t T Number of time points Where Equals u Average rate of return Ri i-th return n Number of observations

### What are the differences between accounting rate of return and internal rate of return?

Internal rate of return (IRR) is a discounted method used for Capital budgeting decisions (investment etc) while accounting rate of retun is a measure for calculating return for a one off payment. IRR is actually the discount rate that equates the Present value of the cash flows to the NPV of the project (investment) while accounting rate of return just gives the actual rate of return. Habib topu1910@gmail.com

### How do you calculate minimum Required Rate of Return?

The minimum Required Rate of Return should be calculated by looking at the rate of return that would be gained by putting money in a savings accounts that accrues interest at the current rate. If you investment is not projected to make more profit than that it does not meet the minimum Required Rate of Return.

### Define internal rate of return?

Money deposited in an interest bearing account has a rate of return. the institution will take that money and reinvest it so they can make money off of it as well. This rate of return on the internal investment is the internal rate of return, which is usually higher than that paid to the original investor.