ROI Calculator

The free ROI calculator allows you to determine the profit or loss returns on your investment instantly.

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Advanced ROI Estimator

The advanced ROI estimator helps you calculate both total and annualized return on investment. Enter the investment duration or specific dates to forecast profitability using this return on investment calculator.

What Is ROI?

In finance and business terms:

"Return on Investment (ROI) is the ratio of net gain to the original investment."

ROI indicates the profitability of an investment. It helps evaluate the average growth over time, including dividends and other returns.

How to Calculate ROI?

Simple ROI:

ROI = ((Net Final Value - Initial Investment) / Initial Investment) × 100

Net Final Value (NFV): The value of the investment at the end
Initial Investment (IV): The starting amount invested

Annualized ROI:

Annualized ROI = ([1 + (Net Final Value - Initial Investment)/Initial Investment]^(1/n) - 1) × 100

n: Total number of years the investment was held

Example Calculation:

Example #1:

Assume you bought a property for $600,000. After 2 years, it sold for $900,000. Calculate both simple ROI and annualized ROI.

Solution:

Simple ROI:

Net Final Value = 900,000

ROI = ((900,000 - 600,000)/600,000) × 100 = 50%

Annualized ROI:

Annualized ROI = [(1 + (900,000 - 600,000)/600,000)^(1/2) - 1] × 100

= (1.5^0.5 - 1) × 100 = 22.47%

ROI and Investment Decisions

ROI helps investors determine whether an investment is worthwhile. Reference table for guidance:

Basis	Condition	Outcome
Predefined Limit Value (LV)	ROI ≥ LV	Investment is Profitable
Predefined Limit Value (LV)	ROI < LV	Investment is Unprofitable
Simple	ROI ≥ 0	Investment is Profitable
Simple	ROI < 0	Investment is Unprofitable
ROIb	ROI ≥ ROIb	Investment is Profitable (Acceptable)
ROIb	ROI < ROIb	Investment is Unprofitable (Not Acceptable)
Weighted Average Cost of Capital (WACC)	ROI ≥ WACC	Investment is Profitable (Acceptable)
Weighted Average Cost of Capital (WACC)	ROI < WACC	Investment is Unprofitable (Not Acceptable)