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How Do I Figure The Interest Rate

March 29th, 2012 at 01:30 am

Okay friends, I have a math problem I need help with!! LOL

In April 2003 I invested $366.52 in BOBE stock. I never added anything else but did let the dividends reinvest. Today, that investment is worth $955.93

How do I correctly figure the rate of return my investment has made?

3 Responses to “How Do I Figure The Interest Rate”

  1. snshijuptr Says:

    I=Prt
    Interest = Principal * APY * years
    I = 955.93 - 366.52 = 589.41
    P = 366.52
    t = 2012 - 2003 = 9

    589.41 = 366.52*r*9
    r = 589.41/(366.52*9)
    r = 0.178680563
    APY = 17.87%

  2. Mary Ann Says:

    Thanks!!

  3. JustCorrecting Says:

    I know this is an awfully old comment, but just wanted to clarify the maths if anyone else stumbles upon it. Assuming the dividend credits annually, the average annual rate of return (RoR) is about 11.2% (which is still excellent!), as interest is compounded.

    It's an easy Excel formula, where you just fiddle with the average RoR each year until the total matches. It's assuming nine full years (1 April 2003-31 March 2012), with the dividend credited at the end of the year.

    OpenBalance Annual RoR Balance EndYear with RoR credited
    Yr 1 366.52 11.2394 407.7146489
    Yr 2 407.7146489 11.2394 453.5393291
    Yr 3 453.5393291 11.2394 504.5144285
    Yr 4 504.5144285 11.2394 561.2188232
    Yr 5 561.2188232 11.2394 624.2964516
    Yr 6 624.2964516 11.2394 694.4636269
    Yr 7 694.4636269 11.2394 772.5171718
    Yr 8 772.5171718 11.2394 859.3434668
    Yr 9 859.3434668 11.2394 955.9285165

    (In my excel formula, I had Annual RoR equal to another cell, in which i just plugged various numbers until it works (any one year may be higher or lower; this is working out the average return.) Funnily enough, that's what excel was created for, but everyone prefers it for holding lists :-) ).

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