Question

Of the following types of returns listed, which best defines the following equation? (Final Value - Initial Cost + Income) / Initial Cost = ?

[A] The Internal Rate of Return of an investment/project
[B] The Holding Period Rate of Return of an investment/project
[C] The Average Yearly Rate of Return of an investment/project
[D] The Average Rate of Return of an investment/project after adjustment for inflation

Answer 1

The holding period rate if return of an investment/project.

The correct answer is B Explanation:

The holding period rate of return of an investment/project is calculated as final value minus initial cost plus income divided by initial cost.