## Subscribe to AFM

Subscribe to AllFinancialMatters
by Email

All Financial Matters

Promote Your Page Too

## The American's Creed

I believe in the United States of America as a government of the people, by the people, for the people; whose just powers are derived from the consent of the governed; a democracy in a republic; a sovereign nation of many sovereign states; a perfect union, one and inseparable; established upon those principles of freedom, equality, justice, and humanity for which American patriots sacrificed their lives and fortunes.

I therefore believe it is my duty to my country to love it; to support its constitution; to obey its laws; to respect its flag; and to defend it against all enemies.

## Reader Question: How Do I Calculate the Periodic Return on a Negative Number?

By JLP | July 16, 2010

Just received this comment on this post. The question:

Came across this post and had a question….how do you calculate your PRR for the time period when the Annualized PRR is a negative number??

When you enter a negative number into the Excel IRR function you get an error because you can’t raise a negative number to a power (i.e. -8.43% ^ (180/365) = #NUM error).

Thanks for your help…great blog!

Okay, this is easy enough to address. The actual formula for calculating a periodic return is…

[(1 + ROR)# of days/365] – 1

In this case, it would like this:

[(1 - .0843)180/365] -1

[.9157.49315] -1

.9575 -1

-.0425 or -4.25%

The readers problem was that he tried to perform the calculation using -8.43% rather than its decimal equivalent.

Hope this helps.

Related:

Reader Question Regarding Personal Rate of Return

How to Annualize a Rate of Return

Reader Question: How Do You Calculate Compound Growth (or Interest)?