Apologies if I am looking at this incorrectly. Trying to calculate a return results in division by zero (2 – 0) / 0. © copyright 2003-2021 Study.com. In our example, this will be the RRSP account. Investments that create a gain or profit are great. The rate of return formula is an easy-to-use tool. To learn more, visit our Earning Credit Page. How to calculate return rate. Free return on investment (ROI) calculator that returns total ROI rate as well as annualized ROI using either actual dates of investment or simply investment length. 's' : ''}}. Jarvista has an MBA and a BS in business administration. If this percentage is a positive number, then you have a profit or gain on your investment. In this example, you made a 25% return or profit from your initial investment of $200,000. The real rate of return is ( (1 + nominal rate of return) / (1 + inflation rate) - 1) * 100 Real Rate of Return Definition The online Real Rate of Return Calculator is a free an easy way to learn how to calculate the real rate of return for any investment. When the percentage is negative, it reflects a loss. Here’s the rate of return formula: Rate of return = [ (Current value − Initial value) ÷ Initial Value ] × 100 In our example, the calculation would be [ ($110 – $100) ÷ $100] x 100 = 10 So this investment had a 10% rate of return (RoR) during this period. Rate of return - the amount you receive after the cost of an initial investment, calculated in the form of a percentage, Rate of return formula - ((Current value - original value) / original value) x 100 = rate of return, Current value - the current price of the item, Original value - the price you originally paid for the item. Now, to calculate the rental property’s ROI, follow the previous cap rate formula and divide the annual return ($7,600) by the total investment you initially made ($110,000). Try refreshing the page, or contact customer support. Let's review. The advantages to using this tool are to understand the performance of your investment and to assist in future investments and strategies. 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On April 30 the market value is 2 (the interest posted to the account). All investors hope to make money on their investment, expressed as a "gain." 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