What is ROI Calculator?
Measures the financial efficiency and profitability of an investment relative to its initial cost basis.
How to Use This Calculator
- Enter initial capital invested.
- Enter final value or total proceeds returned.
- Enter investment duration in years.
- View percentage ROI, net dollar gain, and annualized return.
The Mathematical Formula & Variables
ROI = ((Final - Initial) / Initial) * 100%
Step-by-Step Worked Example
Scenario: $50,000 invested returned $80,000 after 5 years.
- Net profit = $80,000 - $50,000 = $30,000.
- ROI = (30,000 / 50,000) * 100 = 60.0%.
- Annualized ROI = (1 + 0.60)^(1/5) - 1 = 1.60^0.2 - 1 = 9.86%.
Result: +60.00% (+9.86% annualized)
Frequently Asked Questions
What is the difference between simple ROI and annualized ROI?
Simple ROI ignores time horizon, while annualized ROI calculates the equivalent compound growth per individual year.