Effective yield
This query is : Resolved
17 July 2014
hello can anyone guide m how to calculate effective yield in case of multiple unequal cash flows
ex. mr. a deposited following in rd
1Jan 85500
1 Feb 87000
1 march 100000
and say maturity amount is 300000 on 1 Aug
what is effective yield on investments made considering time value
17 July 2014
you need to use sum product formula.
Step 1. Compute the number of days for which the money was paid. For eg for money paid on 1 January, the days shall be 1 august less 1 1 January, giving you 212 days.
Step 2. Then multiply the each amount paid with corresponding number of days.
Step 3. add up the products computed in step 2.
step 4 divide the sum computed in step 3 by sum of amounts paid. this will give you average number of days for which interest is to be computed.
step 5. use the formula sum of amounts paid*x*no of days computed step 4/365 + sum of amounts paid = Rs 300000
Step 1. Compute the number of days for which the money was paid. For eg for money paid on 1 January, the days shall be 1 august less 1 1 January, giving you 212 days.
Step 2. Then multiply the each amount paid with corresponding number of days.
Step 3. add up the products computed in step 2.
step 4 divide the sum computed in step 3 by sum of amounts paid. this will give you average number of days for which interest is to be computed.
step 5. use the formula sum of amounts paid*x*no of days computed step 4/365 + sum of amounts paid = Rs 300000
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