A more conservative approach then IRR in calculating rate
of return.This method still involves discounting future cash flows, however,
all negative cash flows are discounted back to the present (beginning of
the investment) at a given safe rate and added to the initial
investment and all positive cash flows are reinvested and compounded at a
given risk rate and then added to the final cash flow.
(1) Input: Initial Investment (2) Safe and Risk Rates (3) Up to 30 annual cash flows
How many years until investment is fully returned?
End of year Cash Flows:
Internal Rate of Return:
Financial Management Rate of Return:
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