ROI Calculator: Return on Investment
Calculate the return on any investment in seconds: ROI percentage, annualized return, net profit, and investment multiple.
📈 What is Return on Investment (ROI)?
Return on Investment (ROI) is one of the most universal financial metrics in existence. It measures how much value you received relative to what you spent, expressed as a percentage. A 50% ROI means you earned 50 cents of profit for every dollar you invested. A negative ROI means you lost money. ROI can be applied to virtually any financial decision: buying stocks, flipping real estate, running marketing campaigns, purchasing machinery, or launching a product line.
The formula is straightforward: ROI = (Final Value minus Initial Investment) divided by Initial Investment, multiplied by 100. For investments, the "final value" includes the exit price plus any income received (dividends, rent, coupons). For business projects, "final value" is the revenue or quantified benefit generated, and "initial investment" is all associated costs. The simplicity of ROI makes it universally understandable, which is why it is the default language of business cases, investor pitches, and performance reviews.
One limitation of basic ROI is that it ignores time. A 100% ROI over one year is spectacular; the same return over 20 years is mediocre. This is why annualized ROI, also called CAGR (Compound Annual Growth Rate), is essential for comparing investments with different holding periods. The annualized return expresses total performance as if it compounded at a steady rate each year, making a 3-year and a 10-year investment directly comparable.
This calculator handles both the investment use case (initial cost, final value, years held) and the business use case (revenue generated versus cost of investment). For the investment mode, it also shows the investment multiple, which is simply the final value divided by the initial investment. A 2x multiple means your money doubled; a 5x means it quintupled. Private equity and venture capital investors use multiples as a primary measure of fund success, often alongside annualized IRR.
📐 Formula
ROI = (Final Value − Initial Investment) ÷ Initial Investment × 100
Final Value = proceeds received at exit plus any income (dividends, rent) earned during the holding period
Initial Investment = total amount invested at entry including all acquisition costs
Annualized ROI (CAGR) = (Final Value ÷ Initial Investment)1/n − 1
n = number of years held
Investment Multiple = Final Value ÷ Initial Investment (2x means money doubled)
Business ROI = (Revenue − Cost) ÷ Cost × 100
Example (Investment): Buy $10,000, sell for $15,000 after 3 years. ROI = (15,000 − 10,000) / 10,000 × 100 = 50%. CAGR = (15,000/10,000)^(1/3) − 1 = 14.47%/yr.
Example (Business): Spend $20,000 on a marketing campaign, generate $65,000 in revenue. ROI = (65,000 − 20,000) / 20,000 × 100 = 225%.
📖 How to Use This Calculator
Steps
1
Choose a mode: Select Investment Return for stocks, real estate, bonds, or any asset. Select Business/Marketing ROI when you know how much revenue or benefit a cost generated.
2
Enter your figures: In Investment mode, enter the price you paid (initial investment) and the total value you received at exit (including any income). In Business mode, enter total revenue or quantified benefit and total project cost.
3
Enter years held: For Investment mode, slide or type the number of years you held the investment. This enables the annualized return (CAGR) calculation. Set to zero if you only want total ROI.
4
Click Calculate ROI: Results appear instantly showing ROI%, net gain or loss, annualized return, and investment multiple. Green means profit; red means loss.
5
Compare to benchmarks: For long-term stock investments, 7% to 10% annualized ROI matches historical index performance. Business projects typically require 15% to 25% ROI to justify capital allocation. Use the Copy Link button to save and share your specific scenario.
💡 Example Calculations
Example 1: Stock Investment with Dividends
Buy $25,000 of shares, receive $3,200 in dividends, sell for $38,500 after 4 years
1
Initial investment: $25,000. Final value: $38,500 (sale price) + $3,200 (dividends) = $41,700. Years held: 4.
2
Net gain = $41,700 − $25,000 = $16,700. ROI = 16,700 / 25,000 × 100 = 66.8%.
3
CAGR = (41,700 / 25,000)^(1/4) − 1 = 1.668^0.25 − 1 = 13.6% per year. Investment multiple = 1.668x.
ROI = +66.8% total, +13.6% annualized. Profit.
Try this example →Example 2: Digital Marketing Campaign
$15,000 Google Ads campaign generates $72,000 in tracked revenue over 3 months
1
Total cost: $15,000 (includes $12,000 ad spend + $3,000 creative and agency fees). Revenue attributed: $72,000.
2
Net profit = $72,000 − $15,000 = $57,000. ROI = 57,000 / 15,000 × 100 = 380%.
3
Cost per dollar of revenue = $15,000 / $72,000 = $0.21. For every $1 of revenue, the campaign cost 21 cents.
ROI = +380%. Strong campaign. Cost per revenue dollar: $0.21.
Try this example →Example 3: Real Estate Investment (Loss Scenario)
Buy a rental property for $320,000 (all in), sell for $290,000 after 2 years
1
Initial investment: $320,000 (purchase price $300,000 + stamp duty and costs $20,000). Final value: $290,000 (sale price minus agent commission $8,700 = $281,300). We use $281,300.
2
Net loss = $281,300 − $320,000 = −$38,700. ROI = −38,700 / 320,000 × 100 = −12.1%.
3
CAGR = (281,300 / 320,000)^(1/2) − 1 = 0.879^0.5 − 1 = −6.2% per year. Multiple = 0.88x.
ROI = −12.1% total, −6.2% annualized. Loss of capital.
Try this example →❓ Frequently Asked Questions
What is ROI in simple terms?
ROI (Return on Investment) tells you how much you earned relative to what you spent. If you invested $1,000 and received $1,300 back, your ROI is 30%. It is the most basic measure of whether an investment was profitable and how much it returned per dollar invested.
What is the ROI formula?
ROI = (Final Value minus Initial Investment) divided by Initial Investment, multiplied by 100. For business ROI: ROI = (Revenue minus Cost) divided by Cost, multiplied by 100. For annualized ROI (CAGR): (Final Value / Initial Investment)^(1/years) minus 1, then multiply by 100 for a percentage.
What is a good ROI for stocks?
The long-run average annual return of the S&P 500 is roughly 10% nominal (7% real after inflation). Many investors use 7% to 10% annualized ROI as a benchmark for equity investments. Individual stock picks or sector funds can significantly outperform or underperform. Always compare annualized ROI to a relevant benchmark index, not to absolute numbers alone.
What is the difference between ROI and CAGR?
ROI is the total return over the entire holding period. CAGR (Compound Annual Growth Rate) is the annualized equivalent: the constant rate per year that would produce the same total return. A 50% ROI over 3 years equals a CAGR of 14.47% per year. Use CAGR when comparing investments held for different lengths of time, since total ROI alone makes a 3-year investment look the same as a 1-year investment with the same percentage.
How do I calculate ROI for a marketing campaign?
Use the Business/Marketing ROI mode. Enter total revenue attributed to the campaign and all associated costs (ad spend, creative, agency fees, staff time). ROI = (Revenue minus Cost) / Cost x 100. A campaign with $10,000 cost and $40,000 in revenue has ROI of 300%. Be careful to attribute only incremental revenue (sales caused by the campaign), not total sales that would have occurred anyway.
What is an investment multiple and how does it differ from ROI?
The investment multiple (MOIC) equals final value divided by initial investment. A 2x multiple means money doubled; a 3x means it tripled. The relationship to ROI is: ROI% = (multiple - 1) x 100. So 2x = 100% ROI, 3x = 200% ROI. Multiples are used in venture capital and private equity because they intuitively show how much capital was returned without needing to calculate percentages.
What is a good ROI for a business investment or project?
Most companies set a hurdle rate of 10% to 20% annualized ROI for capital projects, reflecting their WACC plus a risk premium. Marketing campaigns with ROI above 100% (more than doubling the spend) are generally considered strong. Manufacturing and infrastructure projects with 15% to 25% ROI are typically approved. The benchmark depends heavily on industry, project risk, and the cost of alternative uses of capital.
Why can two investments with the same ROI be very different in value?
Because ROI ignores time, risk, and absolute size. A 100% ROI over one year and a 100% ROI over ten years represent vastly different annualized returns (100% vs. 7.2%). A $100 profit on $100 invested and a $100,000 profit on $100,000 invested have the same ROI percentage but very different absolute impacts on wealth. Always evaluate ROI alongside CAGR, absolute dollar amounts, and risk level.
How do taxes affect ROI?
Taxes reduce after-tax ROI. Capital gains tax on investment profits, income tax on dividends, and GST or VAT on business revenue all reduce the net return. For a complete picture, calculate after-tax ROI by subtracting applicable taxes from your net gain or revenue before computing the percentage. Long-term investments often benefit from lower capital gains tax rates, which is one reason holding periods matter for after-tax returns.
What is the break-even point in business ROI?
Break-even in business ROI means revenue equals cost, giving 0% ROI. This calculator shows the exact revenue needed to break even (which equals the total cost). Any revenue above that amount generates a positive ROI. For example, a $30,000 marketing campaign needs at least $30,000 in revenue just to break even. Many businesses target a minimum ROI of 100% or more (2x revenue on cost) before approving a campaign.
Should I include financing costs in ROI?
It depends on whether you want unlevered or levered ROI. Unlevered ROI ignores how the investment was financed and reflects the return on the total asset value, useful for comparing projects regardless of funding source. Levered ROI includes interest paid and uses only your equity contribution as the denominator, reflecting the return on your own money. Leverage amplifies both gains and losses. For personal investments, levered ROI (cash-on-cash return) is often more relevant.
What is social ROI and how is it different from financial ROI?
Social ROI (SROI) measures the social, environmental, and economic value created per dollar spent, not just financial returns. It is used by nonprofits, social enterprises, and impact investors to quantify outcomes like health improvements, reduced crime, or environmental benefits in monetary terms. The formula is the same (value created / cost) but the numerator requires assigning monetary values to non-financial outcomes, which involves judgment and proxies. SROI ratios of 3:1 to 10:1 are common in well-documented social programs.