ROI Calculator (Return on Investment)

How to use this calculator

Enter the amount invested, the final value and the holding period. You get the net gain, total ROI and annualized ROI. Work backwards to see the final value needed for a target return.

Formulas

ROI = (F − I) ÷ I
Annualized ROI = (F ÷ I)^1/t − 1

Worked example

10,000 invested, worth 15,000 after 3 years:

• Net gain = 5,000
• Total ROI = 5,000 ÷ 10,000 = 50%
• Annualized ROI = 1.5^1/3 − 1 = 14.47% per year

ROI for business decisions

ROI is also used to compare projects. A marketing campaign costing 2,000 that brings in 2,600 of extra profit has an ROI of 30%. Compare projects by annualized ROI when they last different lengths of time.

Limits

• ROI ignores risk — a high ROI may come with high chance of loss.
• It ignores the timing of cash flows within the period. For projects with many cash flows, use NPV or IRR.

Frequently asked questions

What is the ROI formula?

ROI = (final value − amount invested) ÷ amount invested × 100. Turning 10,000 into 15,000 is a 50% ROI.

Why is annualized ROI important?

Total ROI ignores time. 50% over 3 years (14.5% a year) is very different from 50% over 10 years (4.1% a year).

Should I include costs?

Yes. Add fees, taxes and other costs to the amount invested, or subtract them from the final value, to get a true ROI.

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