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.