Simple rate of return


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Related to Simple rate of return: Average rate of return, Rate of return on investment

Simple rate of return

The return from investments figured by dividing income plus capital gains by the amount of capital invested. The effect of compounding is not taken into account.

Simple Rate of Return

An estimate of the return on an investment. It is calculated simply by finding the investment's profit before taxes and interest expenses. The simple rate of return is easy to calculate but is not always accurate because it considers the investment's profit rather than cash flow. It also does not take into account the effects of compounding. It is also called the accounting rate of return or the book value method.
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In the event that there is a loss on an investment in circumstances where there was a negative simple rate of return on the S&P/TSX Oil & Gas Exploration and Production Index during the applicable investment period, a portion of such loss will be carried forward, on a cumulative basis, to reduce the Incentive Fee payable in respect of subsequent gains.