Return calculation

  In the background section of Programming Assignment 1, you state that the
  return on your investment strategy is the difference between your portfolio
  value and the amount of money you've spent.

  The equation is: (value - principle) / principle

  My question is, why did you subtract 1? 33,000-30,000 = 3,000, so when it is
  divided by 30,000 it already equals .1 or 10%.

I thought it would be clearer that the return is the fraction of the principle
in excess of the principle. Although now that you mention it, maybe not.

  Because I'm not an accountant, I figured I would ask if there is some kind of
  funky math that I need to learn.

This is the way I've usually seen the return specified; perhaps CPAs perfer
subtracting one from things (after all, it's just --). In any event, either
way of thinking about return gets you to the same place, so whichever makes
more sense to you.
Received on Mon Jan 24 2005 - 11:35:48 EST