Finance
ROI Calculator: Measure Investment Returns
Calculate return on investment and compare different investments.
ROI measures profitability as a percentage of cost.
Formula
ROI = (Net Profit / Cost) × 100. Invest $1,000, earn $1,200: ROI = 20%.
Annualized ROI
((1 + ROI)^(1/years)) - 1. A 50% return over 3 years = 14.5% annually.
ROI vs Other Metrics
- ROI: Simple, ignores time value
- NPV: Accounts for time value
- IRR: Rate making NPV = 0
Good ROI?
Stocks: 7-10%. Real estate: 8-12%. Always compare to risk-free alternatives.
Frequently Asked Questions
Good ROI?
7-10% stocks, 8-12% real estate. Higher = higher risk.
Annualize ROI?
((1 + ROI)^(1/years)) - 1.
Limitations?
Ignores time value, risk, and opportunity cost.