I have an asset that I purchased at $440K. 5 years later, I sell this asset at $725K.
How do I compute the annual percentage yield that I have been getting over the past 5 years from this asset?
I have an asset that I purchased at $440K. 5 years later, I sell this asset at $725K.
How do I compute the annual percentage yield that I have been getting over the past 5 years from this asset?
Applying some simple Math:
$725,000/$440,000 = 1.6477272727272....
So, your cumulative return is 64.8% if I round to 3 digits.
Now, if I take the 5th root of 1.648, I get approximately 1.1050742047085970060712045917364
So, your annualized rate of return is 10.5%.
A1 = A0 + rA0
A2 = A0 + rA0 + r(A0 + rA0) = A0 + 2rA0 + r^2A0 = A0(1 + r)^2
At = A0(1 + r)^t
r = (At/A0)^1/t - 1
r = (725/440)^1/5 - 1 = 10.5%