ROI Calculator
Calculate the efficiency and return on an investment.
Required for annualized return
What is ROI?
Return on Investment (ROI) is a performance measure used to evaluate the efficiency of an investment. It measures the amount of return on an investment, relative to the investment's cost.
Formula
ROI = ((Net Profit) / Cost of Investment) × 100
Where Net Profit = Value Returned - Cost of Investment.
Annualized ROI
If an investment takes 5 years to double (100% ROI), the annualized return is not simply 20% (100/5). Due to compounding, we use the formula:
Annualized ROI = [(Ending Value / Beginning Value)^(1/n)] - 1
This gives the Compound Annual Growth Rate (CAGR).