1. What is Annual Yield?

Annual Yield measures the average annual return on an investment over a specified period. It shows the percentage growth (or decline) of an investment each year.

2. How Does the Calculator Work?

The calculator uses the Annual Yield formula:

Where:

• \( FV \) — Future Value (USD)
• \( PV \) — Present Value (USD)
• \( years \) — Investment period in years

Explanation: The formula calculates the average annual percentage return by comparing the investment's growth to its original value over the investment period.

3. Importance of Annual Yield Calculation

Details: Annual Yield helps investors compare different investment opportunities, assess performance, and make informed financial decisions.

4. Using the Calculator

Tips: Enter the investment's present value, future value, and time period in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How is Annual Yield different from Annual Percentage Yield (APY)?
A: Annual Yield is a simple average return, while APY includes compounding effects.

Q2: What is considered a good Annual Yield?
A: This depends on the investment type and risk level. Generally, higher yields indicate better returns but may come with higher risk.

Q3: Can Annual Yield be negative?
A: Yes, if the investment loses value over time, the Annual Yield will be negative.

Q4: Does this account for additional contributions?
A: No, this calculation assumes a single initial investment with no additional contributions.

Q5: How accurate is this for short-term investments?
A: For periods less than one year, other measures like simple return may be more appropriate.