Calculating rate of return

[Torrin Crowther]

If I have the current value of an asset (e.g. a house) in cell A1, the
purchase price in A2, and the term in A3, how do I calculate the rate of
return (e.g. compounding rate of interest) for the asset?

I can work out the future value if I have the purchase price, term (in this
case the number of years) and the interest rate, using the following formua:
=A1*(1+r)^n .....(where "^n" is to the 'power of n' i.e. 'to the power of'
A3, using the POWER finction).

My problem is that when I rearrange the formula to solve for r, I can't get
Excel to calculate the 'nth root.'

Regards

 

[Freemini]

I think the formula you are looking for is something like

10^(LOG(Current/orig)/term)-1
If A1=Current value, A2=Purcheas value and A3=term in years, then the
formula would be
=10^(LOG(A1/A2)/A3)-1

Hope this is what you're looking for.

Mike

 

[Earl Kiosterud]

Torrin,

The nth root can be expressed as X^(1/n), so try this formula:

=(B1/B2)^(1/B3) - 1

Current Val - B1
Orig Val - B2
Term - B3

Earl Kiosterud
mvpearl omitthisword at verizon period net