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Return on Investment (ROI) & Annualized Rate Calculator
Calculates total return on investment (ROI) and converts multi-year gains into standardized annualized returns.
Return on Investment (ROI) & Annualized Rate Solver
Computes total net profit, percentage return, capital multiplier, and annualized CAGR
Presets:
Total Return on Investment
+70%
Capital Multiplier: 1.7x
Net Profit / Loss+$3,500
Annualized ROI (CAGR)+19.35% / yr
Simple Annual Return+23.33% / yr
Capital Breakdown & Gain Comparison:
ROI = (($8,500 - $5,000) / $5,000) × 100% = 70%; Annualized CAGR = (8500/5000)^(1/3) - 1 = 19.35%/yr
What is Return on Investment (ROI)?
Return on Investment (ROI) is a performance measure used to evaluate the efficiency of an investment or compare the efficiencies of several different investments.
Formula & Step-by-Step Calculation
ROI = [(Final - Initial) / Initial] × 100%, Annualized ROI = [(Final / Initial)^(1/t) - 1] × 100%
Percentage return and geometric compound annual return.
Worked Step-by-Step Examples
Example 1
Invested $5,000; returned $8,500 over 3 years
Solution: Total ROI = +70.00%, Annualized ROI = +19.35%/yr
• Profit = $3,500; ROI = (3,500 / 5,000) × 100 = 70.00%; Annualized = (8,500 / 5,000)^(1/3) - 1 = 19.35%
Common Real-World & Academic Use Cases
- ✓ Stock and real estate portfolio performance tracking
- ✓ Corporate marketing campaign profitability analysis
- ✓ Comparing investments with different holding periods
How to Use the Return on Investment (ROI) & Annualized Rate Calculator
1
Enter Initial & Final Amounts
Input money invested and returned.
2
Enter Holding Period
Specify duration in years.
3
Read ROI
Inspect total return percentage and annualized rate.
Frequently Asked Questions
Q: Why is annualized ROI better than simple ROI for long investments?
Because simple ROI ignores the passage of time; a 50% return over 1 year is extraordinary, while a 50% return over 20 years is relatively poor.