Raymond Tiruchelvam

Part A ; equity return (let's assume 10% interest p.a. on borrowing):-
Return = Next Cash in hand (after debt repayment)/ Cash outlay
= (13,000 - 9,000 - 900) / 1000 = 310%

2015-02-01 00:02

Raymond Tiruchelvam

For Part B - there are 2 types of return that can be calculated, namely either time weighted or money weighted return, each will carry different rate of return. I guess you can calculate this yourself using results of part A...

2015-02-01 00:04

Alex Lim

Raymond. Thanks

2015-02-01 06:12

Heavenexile

If you view your cash + stock as an entire portfolio and you have a mandate to deploy available cash to generate return, then method A is meaningful. Having said this, it would also be relevant to the investor of it's return from invested funds solely. In this case, I recommend market value at the time of assessment less cost of investment at the beginning of the period, less by 1. That result would have been return on invested fund for the period is assessment.

2015-02-22 12:53

Heavenexile

Sorry referring to my post above, I meant to say market value divided by cost of investment. Not minus

2015-02-22 12:55