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Simple Rate of Return

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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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He says the 50 percent yearly payment is based on a simple rate of return that equates to 35 percent if compounded.
Incentive Fees The incentive fee is earned when net capital gains earned by the Fund in respect of each realized investment exceeds what the Fund would have earned on such investment if the simple rate of return thereon had been equal to the simple rate of return of the S&P / TSX Oil & Gas Exploration and Production Index during the period from the date of acquisition of such investment up to and including the date of realization.
The incentive fee is earned when net capital gains earned by the Fund in respect of each realized investment exceeds what the Fund would have earned on such investment if the simple rate of return thereon had been equal to the simple rate of return of the S&P / TSX Oil & Gas Exploration and Production Index during the period from the date of acquisition of such investment up to and including the date of realization.
 
 
 
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