Technical Standard
Calculation Methodology
Deterministic financial models, precision handling, and mathematical boundaries.
1. Core Formulas
A. Universal Simple ROI
Measures the percentage gain or loss over a single holding cycle:
ROI = ((Final Value - Total Cost) / Total Cost) × 100
B. Annualized Return (CAGR)
Computes geometric mean rate of return per year over time:
Annualized ROI = ((Final Value / Initial Investment) ^ (1 / Years) - 1) × 100
C. Portfolio Return with Multiple Flows
Net Gain = (Ending Value + Realized Distributions) - (Initial Capital + Contributions + Fees)
2. Numeric Precision & Edge Case Handling
- Division-by-Zero Protection: If cost basis or initial investment is entered as zero or negative, the computation engine halts calculation and renders a clear validation message, preventing
NaN,Infinity, or fatal script crashes. - Calendar Day Accounting: When calculating between calendar dates, elapsed milliseconds are normalized into solar days and divided by 365.25 to account accurately for leap years.
- Rounding Rules: Monetary currency outputs are rounded to two decimal places (half-up arithmetic). Percentages are rounded to two decimal places to prevent floating-point representation anomalies.
3. Scope Limitations & Assumptions
Users must recognize the mathematical assumptions inherent in these models:
- Calculations are nominal pre-tax figures unless tax deductions are manually included in expense fields.
- No purchasing-power adjustment (inflation indexing) is applied.
- Calculations assume deterministic values and do not simulate market volatility or probabilistic Monte Carlo paths.