What do you mean by Marginal Efficiency of Investment?
Marginal Efficiency of Investment refers to the expected rate of return from additional investment. It is calculated to make future predictions and to check the efficiency of the return that the investors will receive when they invest in that new investment opportunity. The marginal efficiency of capital/investment is the expected return from an additional unit of capital employed/investment made, while, the rate of interest specifies the returns from interest-providing security. Thus, since, the firm can earn a higher return from interest, it would not undertake additional investment in capital.
How to Calculate Marginal Efficiency of Investment?
Marginal Efficiency of Investment calculator uses Marginal Efficiency of Investment = Prospective Yield/Supply Price*100 to calculate the Marginal Efficiency of Investment, Marginal Efficiency of Investment refers to an expected rate of return on investment as additional units of investment are made under specified conditions and over a stated point of time. Marginal Efficiency of Investment is denoted by MEI symbol.
How to calculate Marginal Efficiency of Investment using this online calculator? To use this online calculator for Marginal Efficiency of Investment, enter Prospective Yield (YP) & Supply Price (SP) and hit the calculate button. Here is how the Marginal Efficiency of Investment calculation can be explained with given input values -> 25 = 2000/8000*100.