A figure computing the amount earned by a person (or a business) as if the earnings took place over the course of a year. The process of annualization is used to make easier comparisons of financial events that take place over irregular periods of time (See: Annualize).
Annualization comes up a lot in calculating income. Salaried employees often get their wages reported as yearly amounts. For instance, a bank clerk's pay might get advertised as $45,000 a year. You'll rarely see a job posting giving that figure as $3,750 a month or as $173.08 a day. This allows for better comparison of items that might have complicating factors.
For instance, one job might have a lower hourly wage, but significant opportunity for overtime. Meanwhile, a second job might have an irregular schedule, say alternating shifts of three days one week and four days in the following week. Comparing the earnings from the two positions might be difficult on a weekly or monthly basis, but becomes easier when the figures are annualized.
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Finance: What Is a Real Return?67 Views
finance- a la shmoop. what is a real return? like is there a fake return? you
know like the news? well kinda .real return refers to an [man frowns talking to camera]
investment return mapped against inflation. so let's say you invest in a
bond that pays five percent a year for ten years and then pays you back your
principal .boring but nice- you know like a good doctor visit. your nominal return
over that period was 5% but since inflation was 3% a year during that
period on average your real return was only 2% a year- meaning that the
performance of your investment only eked out a 2% net gain against the price of [equation]
milk gas and you know knocked off iPhones. so don't be a chump who thinks
that they're making more money than they really are, and you know keep on keeping
it real. [man sitting in chair, talks to camera]
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