Hoskold method for annual rate of return prediction-2
Input(s)
C: Initial Investment/Capital ($)
i: Rate of Interest (per cent)
\(\mathrm{n}\): Life of the Project (years)
S: Present Value of Total Net Income ($)
Output(s)
\(P V_{i}\): Present Value of Income ($)
\(r_{H}\): Speculative Ratio (fraction)
Formula(s)
\[
\begin{aligned}
\mathrm{PV}_{\mathrm{i}} & =\mathrm{S} \cdot \frac{1-(1+\mathrm{i})^{-\mathrm{n}}}{\mathrm{i}} \\
\mathrm{r}_{\mathrm{H}} & =\frac{\mathrm{S}}{\mathrm{C}}-\frac{\mathrm{i}}{(1+\mathrm{i})^{\mathrm{n}}-1}
\end{aligned}
\]
Control Form:
\[
\mathrm{C} \leq \frac{\mathrm{S}}{\mathrm{r}_{\mathrm{H}}+\frac{\mathrm{i}}{(1+\mathrm{i})^{\mathrm{n}}-1}}
\]
Reference(s)
Serpen, U., Petroleum Economics, Course Notes, ITU Petroleum and Natural Gas Engineering, Istanbul, Turkey, (2008) Page: 48.