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How to Calculate Initial Rate

An initial rate is the rate of return that an investment yields over a specific period of time. For an investment that yields a rate of return over time, the initial rate is the return the first time it is paid. For example, if you buy a stock for $100 and one year later the stock is yielding $110, then your initial rate of return is 10 percent. A simple formula exists so that you can calculate your own initial rate on the return on your investment.

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Instructions

- 1
  Subtract the amount of your investment from the amount of your return. For example, if you buy the $100 stock and one year later it yields $110, then you would subtract $100 from $110 to equal $10.
- 2
  Divide the answer from Step 1 by the amount of your initial investment amount. For example, divide $10 by the initial stock investment price of $100.
- 3
  Multiply the answer from Step 2 by 100. For example, multiply 0.10 by 100 to get 10. This is the percentage of your initial rate, so the answer is 10 percent. You have an initial rate of return of 10 percent.

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