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September 17th, 2008, 12:05 PM  #1 
Newbie Joined: Aug 2008 Posts: 6 Thanks: 0  Calculating Return
With an investment of $2000, can anyone show me how to calculate what rate of return I need to provide a dividend of $200/week? (if possible)

September 17th, 2008, 02:25 PM  #2 
Member Joined: Aug 2007 Posts: 93 Thanks: 0  Re: Calculating Return
It all depends, how much you step on the dope? do you have to pay protection? How many corners do you control? 
September 17th, 2008, 02:32 PM  #3 
Newbie Joined: Aug 2008 Posts: 6 Thanks: 0  Re: Calculating Return
Thanks for that. However, I was looking for a mathematical reponse. And yes, I know it depends on the circumstances, but I was hoping for a reponse that would illustrate how this could be achieved mathematically, in a range of circumstances.

September 17th, 2008, 02:54 PM  #4 
Member Joined: Aug 2007 Posts: 93 Thanks: 0  Re: Calculating Return
Do you actually have plans to find an investment that pays a 420% (52*200 / 2000) annualized rate of return?

September 17th, 2008, 03:46 PM  #5 
Global Moderator Joined: Nov 2006 From: UTC 5 Posts: 16,046 Thanks: 938 Math Focus: Number theory, computational mathematics, combinatorics, FOM, symbolic logic, TCS, algorithms  Re: Calculating Return
A continuous rate of return gives return = exp(r * t), so you're trying to solve $200/$2000 + 1 = exp(r / 52) 1.1 = exp(r / 52) r / 52 = log (1.1) r = 52 log 1.1, which is 496%. STV did the simple interest case already (though he figured on running out of money after the phenomenal first year; if you figured on having the $2000 in addition to the monthly earnings, that would be 620%). 
September 17th, 2008, 04:11 PM  #6 
Member Joined: Aug 2007 Posts: 93 Thanks: 0  Re: Calculating Return
Well if you reinvested the income the investment would surpass the value of total US GDP in about 5 years I am just trying to be conservative here 
September 17th, 2008, 04:50 PM  #7  
Newbie Joined: Aug 2008 Posts: 6 Thanks: 0  Re: Calculating Return Quote:
 
September 17th, 2008, 04:54 PM  #8  
Newbie Joined: Aug 2008 Posts: 6 Thanks: 0  Re: Calculating Return Quote:
 
September 17th, 2008, 05:05 PM  #9  
Global Moderator Joined: Nov 2006 From: UTC 5 Posts: 16,046 Thanks: 938 Math Focus: Number theory, computational mathematics, combinatorics, FOM, symbolic logic, TCS, algorithms  Re: Calculating Return Quote:
 
September 17th, 2008, 06:14 PM  #10  
Member Joined: Aug 2007 Posts: 93 Thanks: 0  Re: Calculating Return Quote:
But the point is that there are a number of methods to calculate a percentage return. In practice continuous returns only get used in academic finance, in the investment business it is discrete compounding. Your investment makes 10% a month, as CR & my calculations show it makes a big difference whether or not you reinvest and compound the income. The difference is less of course at more realistic rates of return. The general discrete formula is V(t+1) / V(t) 1 (V(t) = value at time t). If you want to compound n individual periods it is [V(t+1) / V(t)]^n 1. If you want to take a cumulative return over n periods and calculate the nuallized return it its [V(tn) / V(t)]^(1/n)1  

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