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ROI Calculator

Calculate your Return on Investment (ROI) to evaluate the profitability of your investments and business decisions. This universal metric helps you compare the efficiency of different opportunities and make informed financial choices.

How It Works

ROI measures the gain or loss generated on an investment relative to the amount of money invested. The basic formula is:

ROI = (Net Profit / Investment Cost) × 100

Where Net Profit = Amount Returned - Amount Invested

. For comparing investments over different time periods, we also calculate Annualized ROI:

Annualized ROI = [((Final Value / Initial Cost)(1/Years)) - 1] × 100

Inputs Explained

  • Amount Invested: The initial capital you put into the investment (must be greater than zero)
  • Amount Returned: The final value you received from the investment (can include sale proceeds,
dividends, etc.)
  • Investment Fees (Advanced): Any costs associated with the investment (brokerage fees, transaction costs, etc.)
  • Additional Gains (Advanced): Extra income from the investment (dividends, interest payments, etc.)
  • Investment Length (Advanced): Time period of the investment used to calculate annualized ROI

    • Example

    You invested $2,000 in a new marketing campaign, which generated $5,000 in extra sales. What is the ROI?

    Calculation:

    • Net Profit = $5,000 - $2,000 = $3,000
    • ROI = ($3,000 / $2,0
    00) × 100 = 150%

    This means for every dollar invested, you earned $1.50 in profit.

    Tips & Notes

    • ROI doesn't account for the time value of money or investment risk
    • Annualized ROI is more
    useful for comparing investments with different time horizons
  • A positive
    • ROI indicates a profitable investment, while a negative ROI indicates a lossli>
  • ROI should not be the sole factor in investment decisions; consider other metrics like IRR and NPV
  • ROI differs from profit as it expresses returns relative to investment size

    • Frequently Asked Questions

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    A "good" ROI depends on the context and industry. Generally, an ROI of 7% or higher is considered good for stock market investments, while real estate investments might aim for 8-12%. However, higher-risk investments may require higher ROIs to compensate for the risk.

    Annualized ROI accounts for the time period of an investment. The formula is: [((Final Value / Initial Cost)^(1/Years)) - 1] × 100. This allows you to compare investments with different holding periods on an equal basis.

    ROI is a simple percentage calculation that doesn't consider the time value of money. IRR (Internal Rate of Return) is a more complex metric that accounts for cash flows over time and represents the discount rate that makes the net present value of all cash flows equal to zero.

    Yes, ROI can be negative when the investment loses money. A negative ROI indicates that the total return is less than the initial investment. For example, if you invest $1,000 and only get back $800, your ROI would be -20%.

    ROI doesn't account for the time value of money, risk factors, or the size of the investment. It also doesn't consider cash flows during the investment period. For more comprehensive analysis, combine ROI with other metrics like NPV, IRR, and payback period.

    Disclaimer

    This calculator is for educational and informational purposes only. It is not intended to provide financial advice. The results should not be used as the sole basis for making investment decisions. Past performance does not guarantee future results. Always consult with a qualified financial advisor before making any investment decisions. CalculatorBolt is not responsible for any financial losses incurred as a result of using this tool.

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    Calculate ROI

    Please enter a valid amount greater than zero.
    Please enter a valid amount.

    Please enter a valid fee amount.
    Please enter a valid gains amount.
    Please enter a valid number of years.
    Please enter months between 0 and 11.

    Results

    Enter values and click Calculate ROI

    Need Help?

    Enter your investment details to calculate ROI. Use Advanced Options for more precise calculations including fees and time period.