Enter your initial investment and the final value to calculate your return on investment (ROI).

ROI Calculation Formula

The following formula is used to calculate the ROI from your investment:

ROI (%) = (Final Value - Initial Investment) / Initial Investment * 100

Variables:

  • ROI is the return on investment (%).
  • Initial Investment is the amount of money invested initially ($).
  • Final Value is the value of the investment at the end ($).

To calculate the ROI, subtract the initial investment from the final value, divide by the initial investment, and multiply by 100.

What is ROI Calculation?

ROI calculation refers to the process of determining the percentage return on an investment relative to its cost. This involves understanding your initial investment, the final value of the investment, and calculating the difference. Proper ROI calculation ensures accurate assessment of investment performance and financial planning.

How to Calculate ROI?

The following steps outline how to calculate the ROI using the given formula:

  1. First, determine your initial investment.
  2. Next, determine the final value of your investment.
  3. Use the formula from above: ROI (%) = (Final Value – Initial Investment) / Initial Investment * 100.
  4. Finally, calculate the ROI by plugging in the values.
  5. After inserting the variables and calculating the result, check your answer with the calculator above.

Example Problem:

Use the following variables as an example problem to test your knowledge:

Initial Investment = $10,000

Final Value = $12,500

State Tax Rate = 0% (not applicable for ROI)

FAQ

1. What is ROI?

ROI stands for return on investment. It is a measure of the profitability of an investment, expressed as a percentage of the initial investment.

2. How is ROI different from other financial metrics?

ROI specifically measures the percentage return on an investment relative to its cost, making it a direct indicator of investment efficiency and profitability.

3. How often should I calculate ROI?

It’s helpful to calculate ROI whenever evaluating the performance of an investment, especially when comparing multiple investments or considering new ones.

4. Can this calculator be used for different types of investments?

Yes, this calculator can be used for any type of investment where you can determine the initial investment and final value.

5. Is the calculator accurate?

The calculator provides an estimate of your ROI based on the inputs provided. For exact figures, it’s best to consult financial statements or professional advice.