Enter the current return ($), the expected risk free return ($), and the invested amount ($) into the Return on Premium Calculator. The calculator will evaluate and display the Return on Premium.
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Return on Premium Formula
The following formula is used to calculate the Return on Premium.
ROP = (CR - ERFR) / P *100
- Where ROP is the Return on Premium (%)
- CR is the current return ($)
- ERFR is the expected risk free return ($)
- P is the invested amount ($)
How to Calculate Return on Premium?
The following example problems outline how to calculate Return on Premium.
Example Problem #1
- First, determine the current return ($).
- The current return ($) is calculated to be : 4,000.
- Next, determine the expected risk free return ($).
- The expected risk free return ($) is measured to be: 1,000.
- Next, determine the invested amount ($).
- The invested amount ($) is found to be: 20,000.
- Finally, calculate the Return on Premium using the formula above:
ROP = (CR – ERFR) / P *100
The values given above are inserted into the equation below and the solution is calculated:
ROP = (4,000 – 1,000) / 20,000 *100 = 15 (%)
Example Problem #2
The variables needed for this problem are provided below:
current return ($) = 555
expected risk free return ($) = 140
invested amount ($) = 1500
This example problem is a test of your knowledge on the subject. Use the calculator above to check your answer.
ROP = (CR – ERFR) / P *100 = (%)