Hoskold method for annual rate of return prediction-1

Input(s)

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.