Return on Investment Calculator
Calculate ROI accurately for any investment. Discover advanced ROI formulas, annualized returns, risk-adjusted metrics, and compare performance across different asset classes.
What is ROI and Why is it Important?
Return on Investment (ROI) is a performance metric that measures the profitability of an investment. It is important because:
- It provides a simple measure of investment profitability.
- It enables easy comparison between different investment opportunities.
- It assists in making informed decisions regarding resource allocation.
How to Use This Calculator
- Enter the initial investment amount.
- Input the final value of the investment.
- The calculator will automatically compute ROI as a percentage.
- Click 'Reset' to revert to the default values.
Frequently Asked Questions
How is ROI calculated?
ROI is calculated by subtracting the initial investment from the final value, dividing the result by the initial investment, and then multiplying by 100. The formula is: ROI = ((Final Value - Initial Investment) / Initial Investment) * 100.
What is considered a good ROI?
A higher ROI is generally better, but what is considered 'good' depends on the industry, risk tolerance, and alternative investment options.
What are the limitations of ROI?
ROI does not account for the time value of money, risk factors, or financing costs, and it can be influenced by the chosen inputs.