I’d be happy to explain the inputs and outputs of this investment return calculator.

Inputs:

• Investment Type: this is a drop-down menu where the user can select from four different types of investments (PICO, PIPO, CICO, CIPO).

  • PICO: This stands for “Paid-in Capital Only” and is a type of investment where the investor only puts in the initial capital and does not receive any additional cash flows during the life of the investment.

  • PIPO: This stands for “Paid-in, Paid-out” and is a type of investment where the investor puts in the initial capital and receives a fixed cash flow each year during the life of the investment.

  • CICO: This stands for “Cash-in, Cash-out” and is a type of investment where the investor puts in an initial cash amount and receives a fixed percentage of that amount each year during the life of the investment.

  • CIPO: This stands for “Cash-in, Profit-out” and is a type of investment where the investor puts in an initial cash amount and receives a variable cash flow each year during the life of the investment based on the rate of return.

• Initial Investment: this is a numeric input field where the user can enter the amount of money they initially invested.
• Number of Years: this is a numeric input field where the user can enter the number of years they plan to hold the investment.
• Expected Return: this is a numeric input field where the user can enter the expected rate of return on the investment as a percentage.

Example: Let’s say the user selects “CIPO” as the investment type, enters an initial investment of $10,000, plans to hold the investment for 5 years, and expects a 7% rate of return.

Outputs:

• Flows: this is a table that displays the cash flows for each year of the investment. The table shows the year number and the cash flow for that year.
• ROI: this is the return on investment as a percentage. It is calculated by taking the total amount of money earned from the investment (cash flows minus initial investment) and dividing it by the initial investment.
• ROE: this is the return on equity as a percentage. It is calculated by taking the total amount of money earned from the investment (cash flows) and dividing it by the initial investment.
• NPV: this is the net present value of the investment. It is calculated by discounting the cash flows back to their present value and summing them up.
• IRR: this is the internal rate of return of the investment. It is the rate at which the NPV of the cash flows equals zero.
• Payback Period: this is the amount of time it takes for the cumulative cash flows to equal the initial investment.
• Judgment: this is a statement that tells the user whether the investment is profitable or not based on the NPV. If the NPV is positive, the investment is profitable. If the NPV is negative, the investment is not profitable.

Example: Based on the inputs mentioned above, the calculator might show a cash flow table with $7,715.55 in year 5. The ROI might be 17.16%, the ROE might be 12.44%, the NPV might be $1,080.04, the IRR might be 8.24%, and the payback period might be 3 years. The judgment might say that the investment is profitable.