Rate Of Return Calculator Simple

Simple Rate of Return Formula:

\[ Simple\ ROR = \frac{End - Start + Income}{Start} \times 100 \]

Simple Rate of Return:

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1. What is Simple Rate of Return?

The Simple Rate of Return (ROR) is a basic investment performance metric that calculates the percentage return on an investment over a specific period, taking into account both capital gains/losses and income generated.

2. How Does the Calculator Work?

The calculator uses the Simple Rate of Return formula:

\[ Simple\ ROR = \frac{End - Start + Income}{Start} \times 100 \]

Where:

\( End \) — Ending value of investment
\( Start \) — Starting value of investment
\( Income \) — Income generated during the period

Explanation: This formula calculates the total return as a percentage of the initial investment, including both price appreciation/depreciation and any income received.

3. Importance of Simple ROR Calculation

Details: Simple ROR provides a quick and easy way to evaluate investment performance, compare different investments, and make informed financial decisions. It's particularly useful for basic investment analysis and personal finance management.

4. Using the Calculator

Tips: Enter the starting investment value, ending investment value, and any income received during the period. All values should be in the same currency unit. Ensure start value is greater than zero for accurate calculation.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between Simple ROR and Annualized ROR?
A: Simple ROR shows total return over the entire period, while Annualized ROR calculates the average yearly return, accounting for compounding effects.

Q2: Can Simple ROR be negative?
A: Yes, if the total return (end value + income - start value) is negative, indicating a loss on the investment.

Q3: What types of income should be included?
A: Include all investment income such as dividends, interest payments, rental income, or any other cash flows received during the investment period.

Q4: How does this differ from ROI?
A: Simple ROR is essentially the same as basic Return on Investment (ROI), both measuring the percentage return on the initial investment amount.

Q5: When is Simple ROR most useful?
A: It's best for short-term investments, quick comparisons, and situations where time value of money is not a critical factor in the analysis.