ROI Calculator
Calculate return on investment and annualized ROI for any investment.
ROI (Return on Investment) Calculator measures the efficiency or profitability of an investment by comparing the net gain or loss to the initial cost. It is one of the most widely used financial metrics because it provides a simple, comparable percentage that lets you evaluate different investments on the same scale.
Enter the initial investment amount and the final value (or the net gain directly), and the tool calculates ROI as a percentage using the formula: ROI = (Net Profit / Cost of Investment) × 100. You can also calculate annualized ROI by including the time period, which allows fair comparison between investments held for different durations.
ROI is used to evaluate marketing campaigns, real estate purchases, stock investments, business projects, and equipment upgrades. A positive ROI means the investment generated a profit; a negative ROI indicates a loss. Remember that ROI alone does not account for risk or the time value of money.
Frequently Asked Questions
Code Implementation
def calculate_roi(cost: float, revenue: float) -> float:
"""Calculate Return on Investment as a percentage."""
if cost == 0:
raise ValueError("Cost cannot be zero")
net_profit = revenue - cost
roi = (net_profit / cost) * 100
return roi
# Example
cost = 1000
revenue = 1250
roi = calculate_roi(cost, revenue)
print(f"Net Profit: ${revenue - cost:.2f}")
print(f"ROI: {roi:.2f}%") # ROI: 25.00%
# Annualized ROI
def annualized_roi(roi_percent: float, years: float) -> float:
"""Convert total ROI to annualized (CAGR-style)."""
return ((1 + roi_percent / 100) ** (1 / years) - 1) * 100
print(f"Annualized over 3 years: {annualized_roi(roi, 3):.2f}%")Comments & Feedback
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