# Hoskold method for annual rate of return prediction-1

C: Initial Investment/Capital ($) $$r_{H}$$: Speculative Ratio (fraction) $$i$$: Rate of Interest (per cent) $$n$$: Life of the Project (years) D: Present worth Factor (dimensionless) ## Output(s) $$D E$$: Present worth Factor with Total Net Undiscounted Cash Flow during the whole project ($)

$$r_{H}$$: Speculative Ratio (fraction)

## Formula(s)

$\begin{gathered} D E=r_{H} \cdot C \frac{1-\left(\frac{1}{1+i}\right)^{n}}{i}+\left(\frac{1}{1+i}\right)^{n} \cdot C \\ r_{H}=i \cdot \frac{\frac{D E}{C}-(1+i)^{-n}}{1-(1+i)^{-n}} \end{gathered}$

Control Form:

$\mathrm{C} \leq \frac{\mathrm{DE}}{\frac{\mathrm{r}_{\mathrm{H}}}{\mathrm{i}}-\left[\left(\frac{\mathrm{r}_{\mathrm{H}}}{\mathrm{i}}-1\right) \cdot(1+\mathrm{i})^{-\mathrm{n}}\right]}$

## Reference(s)

Serpen, U., Petroleum Economics, Course Notes, ITU Petroleum and Natural Gas Engineering, Istanbul, Turkey, (2008) Page: 47.

## Related

### Average book rate of return method

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