Hoskold method for annual rate of return prediction-2

Input(s)

C: Initial Investment/Capital (\$)

i: Rate of Interest (per cent)

$\mathrm{n}$: Life of the Project (years)

S: Present Value of Total Net Income (\$)

Output(s)

$P V_{i}$: Present Value of Income (\$)

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

Formula(s)

$$ \begin{aligned} \mathrm{PV}_{\mathrm{i}} & =\mathrm{S} \cdot \frac{1-(1+\mathrm{i})^{-\mathrm{n}}}{\mathrm{i}} \\ \mathrm{r}_{\mathrm{H}} & =\frac{\mathrm{S}}{\mathrm{C}}-\frac{\mathrm{i}}{(1+\mathrm{i})^{\mathrm{n}}-1} \end{aligned} $$

Control Form:

$$ \mathrm{C} \leq \frac{\mathrm{S}}{\mathrm{r}_{\mathrm{H}}+\frac{\mathrm{i}}{(1+\mathrm{i})^{\mathrm{n}}-1}} $$

Reference(s)

Serpen, U., Petroleum Economics, Course Notes, ITU Petroleum and Natural Gas Engineering, Istanbul, Turkey, (2008) Page: 48.