Generalize to all investment Effective yield(or rate of return)is the r that makes the present value of investment returns equal to the present value of the cost Our example: cost=1000 in period 1 return=100 each year starting from period 2 Education example is a little more complexGeneralize to All Investment • Effective yield (or rate of return) is the R that makes the present value of investment returns equal to the present value of the cost. • Our example: cost=1000 in period 1; return=100 each year starting from period 2. • Education example is a little more complex