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No. 04Profitability

Return on Investment Calculator

Measure the return on any investment — equipment, marketing, a property or a portfolio — as a total percentage and as an annualized rate.

Total cost of the investment, including fees.

What it’s worth now, or the total you got back.

Optional — used for annualized ROI. Enter 0 to skip. Decimals allowed (e.g. 1.5).

Results

Return on investment

50%

$0$5,000$10K$15K0123Years
Net gain (or loss)
$5,000.00
Annualized ROICompound annual rate
14.47%
Show the calculation
  1. Net gain$15,000.00 − $10,000.00= $5,000.00
  2. ROI$5,000.00 ÷ $10,000.00 × 100= 50%
  3. Annualized($15,000.00 ÷ $10,000.00)^(1 ÷ 3) − 1= 14.47%

How it’s calculated

Net Gain
equals Final Value − Amount Invested
ROI
equals (Net Gain ÷ Amount Invested) × 100
Annualized ROI
equals ((Final Value ÷ Amount Invested)^(1 ÷ Years) − 1) × 100

Annualized ROI is the constant yearly rate that would grow the investment to its final value over the holding period, assuming gains compound. It makes investments held for different lengths of time comparable.

Worked example

You’re comparing two $12,000 investments. Option A returns $16,500 after 2 years. Option B returns $18,000 after 4 years.

  1. Option A: ROI = $4,500 ÷ $12,000 = 37.5%; annualized 17.26%
  2. Option B: ROI = $6,000 ÷ $12,000 = 50%; annualized 10.67%

Option B has the bigger total return ($6,000.00 vs. $4,500.00), but Option A earns more per year. Which is better depends on what you could do with the money after year two.

Assumptions and limitations

  • Include all costs in the amount invested — purchase price, fees, installation, commissions — and all proceeds in the final value, including income received along the way.
  • Simple ROI ignores timing. A 50% return over one year and over ten years show the same ROI; use annualized ROI to compare.
  • Annualized ROI assumes a single investment at the start and a single value at the end. For investments with multiple cash flows, an IRR calculation is more accurate.
  • Taxes and inflation are not included.

Results are estimates for information only and are not financial, tax or legal advice. See our disclaimer.