Advertisement
Online Test Banks
Score higher
See Online Test Banks
eLearning
Learning anything is easy
Browse Online Courses
Mobile Apps
Learning on the go
Explore Mobile Apps
Dummies Store
Shop for books and more
Start Shopping

How to Calculate the Rate of Return on Capital

Calculating the rate of return on a capital investment is a little bit tricky, and you'll need more than QuickBooks 2013. In almost every case, you need either a financial calculator (a good one) or a spreadsheet program, such as Microsoft Excel.

If you don’t have Excel, you should still be able to use a financial calculator or some other spreadsheet program.

Calculating a rate of return on a capital expenditure requires three steps:

  1. Calculate the investment amount.

  2. Estimate the net cash flows paid by the investment.

  3. Use either a financial calculator (such as one of those fancy Hewlett-Packard calculators) or a spreadsheet program (such as Microsoft Excel) to calculate the rate of return measure.

If you can, use a spreadsheet program rather than going the fancy-calculator route — such calculators can be less than user-friendly. Roughly three decades ago, the joke among many young MBAs was that the ability to calculate the rate of return measures on a Hewlett-Packard 12C calculator was worth $40,000 a year. The slogan, in fact, was “40G for a 12C.”

  • Add a Comment
  • Print
  • Share
blog comments powered by Disqus
Advertisement
Advertisement

Inside Dummies.com

Dummies.com Sweepstakes

Win an iPad Mini. Enter to win now!