Rate of return is a financial measure of the profitability of an investment or a project. It is “what you get, minus what you started out with, expressed as a percentage of what you started with” (Getlner, et al., 2007, p. 176). Using the above example in the payback period concept, let us examine the rate of return of the condominium unit investment as several periods of time. At 12 ½ years, the owner would have made £270,000 of rental profits, equal to the initial investment on the unit.
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