Average Rate of Return

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  • Average Rate of Return
    • Step One
      • Add each year's cash inflows (cummulativecashflow)
        • Minus initial investment
    • Step Two
      • Average Annual Profit = cummulative cash flow / number of years
    • Step Three
      • AVERAGE ANNUAL PROFIT / INITIAL INVESTMENTx 100
  • INITIAL INVESTMENT = 10M POUNDS
  • Year 1 = 4M
  • Year 2 = 5M
  • Year 3 = 6M
  • Year 4 = 7M
  • Year 5 = 5M

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