Localfund.com - All about Fund and Investment
*Home>>>Return Investment

Which investment gives a higher return?


Asset A: HPR=10% Holding Period=8months
Asset B: HPR=-6% HP=15months
Asset C: HPR=15% HP=3years
Asset D: HPR=5% HP=18weeks

If possible, pls show how u got the answer.
Thx

Patrick's answer is a close approximation, but theoretically it is wrong. He used simple division and multiplication to arrive at his answers. That's not accurate, because interest rates will result in exponential growth, so you've gotta use exponents. The equation you want is the Annualized HPR equation given here:
http://en.wikipedia.org/wiki/Holding_Per...

I didn't calculate all of them, but for asset A the rate should be:
15.369% (I rounded to 3 decimal places).

Here is how you want to use that equation:

"Present Value" - this is the value after collecting the interest for each asset. I would use these numbers for the present values:

Assest A: 1.10
Assest B: 0.94 (you said the rate was -6% right? If it's 6%, this should be 1.06)
Assest C: 1.15
Assest D: 1.05

"Intermediate gains" are zero, they don't apply here.

"Initial value" is easy, this number is 1 for each example.

"number of years" is just the holding time divided by 1 year, or 12 months. So for asset A, the # of years is 8/12, or 2/3.

Then in the equation you use the reciprocal of the number of years, so for Asset A you will end up with 3/2, or 1.5
That is the exponent you are going to use outside the parentheses.

Sorry if I over-explained this. Good luck!

Oh and to answer the question, Asset D gives the highest return.

convert each return rate to a common period, like one year.
Hence 10% for 8 months equals 15% for 12 months
6% for 15 months = 4.8% for 12 months
15% for 3 years = 5% for 12 months
5% for 18 weeks = 14.44% for 12 months.

Tags
  Startup Capital   Sector Fund   Seed Money   Seed Capital   Return Investment   Real Money   Real Estate Investment   Raise Capital
Related information
  • What investment can give a return of 20% per month?

    Honestly... Visit swisscash,net I am an investor with them and have a US$50K portfolio there. I'm getting paid every month on time as promised and guaranteed. The average returns are 20% per...

  • What kind of investment will have 10% return?

    For the very long-term, stocks have averaged around 10% per year. I don't really know which index they were talking about, but people generally use the S&P 500 indices as references.

    ...
  • Is the em-pay system which promise an incredibly high return for a small investment true?

    Ponzi scheme.

    ...
  • If I want to get at least 14% return on my 1000 investment, How should I allocate them?

    Swiss cash is a scam! ...

  • Is the IRR the annual equivalent return on a given investment?

    IRR is indeed the annual equivalent return on a given investment, discounting future cash flows in order to consider the time value of money. IRR equals the % return which will make your present v...

  • What is a realistic short term (6 month) return for a $50,000 investment?

    safe or otherwise? I have a company that is selling glass in the middle east.

    ...
  • Does the cash-on-cash return in a real estate investment include income taxes?

    Yes. Your ability to deduct the mortgage interest on your income tax return reduces your cash outflow related to the real estate purchase. So, it should be figured into the cash-on-cash ROI (Ret...

  • What is the best return you gained on an investment?

    I invested $6 at the track and got $1800 back in 2 minutes, nothing has ever beat that.

    ...
  •  

    Categories--Copyright/IP Policy--Contact Webmaster