How ROI Works
ROI (Return on Investment) measures the gain or loss relative to the cost. The formula is simple: (Amount Returned - Amount Invested) / Amount Invested × 100. A $10,000 investment that returns $15,000 has an ROI of 50%.
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Frequently Asked Questions
What is a good ROI?
It depends on the asset class. Stocks average 7-10% per year. Real estate 8-12%. A business project should aim for at least 15-20% to justify the risk.
How is ROI calculated?
ROI = (Gain - Cost) / Cost × 100. Simple and universal.