About the ROI Calculator
This ROI calculator tells you how much an investment earned relative to what it cost. Enter the amount you put in, any extra costs along the way (fees, maintenance, setup), and the total you got back — sale proceeds plus any income — and it returns the total return on investment, the net profit and the money multiple.
Because a 50% return over one year is very different from 50% over ten years, the calculator also converts the result into an annualized ROI (the compound annual growth rate). That makes it fair to compare projects that ran for different lengths of time, such as a piece of equipment, a marketing campaign, a rental renovation or a stock position.
The math assumes a single upfront investment and a single final value. If money went in or came out at several different dates, an IRR or XIRR calculation will give a more precise annual return.
With the default inputs, the total roi is 50%. Change any value above to recalculate instantly.
How to use the roi calculator
- 1Enter the amount you originally invested.
- 2Add any extra costs such as fees, repairs or setup expenses.
- 3Enter the total amount returned — sale price or final value plus any income.
- 4Enter how many years the money was invested.
- 5Compare the total ROI and the annualized ROI against other options.
Formula and method
Total ROI divides the net profit (amount returned minus total cost) by the total cost and expresses it as a percentage. Total cost is the initial investment plus any additional costs you entered, because every dollar you had to put in counts toward what the return must beat.
Annualized ROI is the constant yearly compound rate that would turn the total cost into the amount returned over the period — the same as CAGR. It lets you compare a two-year project against a five-year one on equal terms. It assumes all costs are paid at the start and the return arrives at the end.
- R
- Amount returned (final value plus income)
- C
- Total cost (investment + additional costs)
- t
- Holding period in years
Worked examples
$50,000 grows to $75,000 in 2 years
Net profit is $75,000 − $50,000 = $25,000, which is a 50% total return. Spread over two years, (1.5)^(1/2) − 1 gives an annualized ROI of about 22.47% per year.
$10,000 grows to $16,000 over 5 years
A 60% total return looks strong, but over five years it works out to (1.6)^(1/5) − 1 ≈ 9.86% per year — roughly in line with long-run stock market returns.
Equipment with extra costs, sold after 18 months
Adding $1,500 of maintenance to the $8,000 purchase makes the total cost $9,500. Returning $12,500 gives a $3,000 profit, a 31.58% ROI, or about 20.08% a year over 1.5 years.
Frequently asked questions
What is a good ROI?+
It depends on risk and time. Broad US stock index funds have historically returned roughly 10% a year before inflation (about 7% after), so a riskier business project usually needs a clearly higher annualized ROI to be worth it. Always compare the annualized figure, not the total.
What is the difference between ROI and annualized ROI?+
Total ROI is the overall gain as a percentage of cost, regardless of how long it took. Annualized ROI converts that into an equivalent compound yearly rate, so a 50% gain over 2 years (22.5% a year) can be compared with a 50% gain over 5 years (8.4% a year).
Can ROI be negative?+
Yes. If you get back less than you put in, the net profit is negative and so is the ROI. An ROI of −100% means the entire investment was lost.
Should I include income such as dividends or rent?+
Yes. Add any income you received during the holding period to the amount returned. Likewise, include ongoing costs such as fees, repairs or advertising spend in the additional costs so the ROI reflects your true outcome.
When should I use IRR instead of ROI?+
Use IRR or XIRR when cash went in or out at several different times, for example monthly contributions or staggered rental income. Simple ROI and its annualized version assume one payment in at the start and one amount back at the end.
Results are estimates for educational purposes and are not financial advice. Rates, fees and terms vary — confirm with your lender or a licensed advisor before making decisions.