Formula – Return on Equity

By on June 11, 2018

In order to find the return on equity of an asset, the amount of equity has to be tabulated first.

V – M = E

V – Current market value

M – Mortgage balance owing

E – Equity

Equity on a property refers to the difference of the market value of a property and the amount outstanding of a mortgage debt.

With equity calculated using the formula above, we can now use it to calculate return on equity using the below equation.

(P – E)/E = R

P – Proceeds from sale

E – Equity

R = Return on equity

Unlike return on investment which works out the returns based on investment capital, return on equity works out the returns based on equity.

Expressed as a percentage, this is used as a measurement of how profitable an investment is.



You May Also Like...

hair1 eye1 abs1
View the latest and lowest Singapore Home Loan rates
Why friends look forward to your FAILURE
Hiring a competent agent
Best EVER excuses for being late to work

Investors and homeowners receive our newsletters. Subscribe to our list.

Get More Real Estate Knowledge & Insights From Our Newsletters

Enter your email below

Send this to a friend