Section 1.2 covers asset return calculations, including both simple and contin-uously compounded returns. How to Calculate a Simple Return on Investment. A simple return gives you the return on your investment after you’ve sold the stock. HPR is calculated as the number in B divided by the number in D from the previous row. Return Calculations Updated: June 24, 2014 In this Chapter we cover asset return calculations with an emphasis on equity returns. Suppose P be the principal amount, R be the rate of interest per annum and n be the time (in months), then the formula can be written as: Simple Interest for n months = (P × n × R)/ (12 ×100) The formula to calculate the simple interest on a yearly basis has been given above. Although it seems like a simple formula, it gives results that are required for making some major decisions – be it in finances or other return related decisions. The simple rate of return is calculated by taking the annual incremental net operating income and dividing by the initial investment. The simple rate of return formula for analyzing profit or loss is calculated by subtracting the initial value of an investment from its current value, dividing the result by the initial value of the investment and multiplying that result by 100 to express the result as a percentage. Lookup fields are not supported in a formula, and the ID of newly inserted row can't be used as the ID doesn't exist when the formula is processed. Simple Return Formula: Log Return Formula: While there are several benefits of using log returns like log-normality, time additiveness, approximate raw-log equality and mathematical ease, a common fallacy is to use is at places where it is not appropriate. Hence, it is very important to arrive at the accurate calculation, as it forms the basis of entire investments, future planning, and other economic-related decisions. Simple Return Calculation. The formula is: Net proceeds + Dividends / Cost Basis – 1 Expected Return formula is often calculated by applying the weights of all the Investments in the portfolio with their respective returns and then doing the sum total of results. For example, the formula in D3 is “=B3 + C3” and kicks out \$22,273. It is easier to calculate than the annualized total return. Section 1.1 covers basic time value of money calculations. A simple return (or simple interest) is a rate of return that is based on the principal, or original investment amount, year after year. When calculating the annual incremental net operating income, we need to remember to reduce by the depreciation expense incurred by the investment. When you invest in mutual funds, the mutual fund company provides an annual report for each fund that details its performance over the past year, past three months and other relevant periods of time. Now, let us see the formula to calculate the interest for months.