To calculate net present value of an investment, divide the guaranteed return by 1 plus the interest rate that a different investment would bring in, and subtract the initial investment from the result. Consider a positi... More »

The formula to calculate return on investment is ROI = (gain from investment - cost of investment) / cost of investment. The subsequent result is expressed as a ratio or a percentage. More »

IRR, or internal rate of return, refers to the discount rate that, when used, results in a zero net present value of existing cash flows from an investment or project. It is used in capital budgeting to rank prospective ... More »

The compound annual growth rate, or CAGR, of an investment is calculated by dividing the ending value by the beginning value, taking the quotient to the power of one over the number of years the investment was held and s... More »

Real interest rate is calculated by adjusting for the effects of inflation when compared to the nominal interest rate. The calculation formula is simple, as it only requires subtracting the rate of inflation from the nom... More »

Apart from principal and interest rate, prospective borrowers need to know the length of time over which a loan is to be paid in order to calculate monthly payments, explains the Consumer Financial Protection Bureau. Ins... More »

The NPV function uses data points that signify discount rate, income and future payments to calculate the net present value of an investment. When used in an NPV calculation, the income is represented by positive values ... More »