Calculate the Return on Investment for any project or asset.
Return on Investment (ROI) is a popular profitability metric used to evaluate the efficiency of an investment or compare the efficiency of several different investments.
ROI = [(Final Value − Initial Cost) / Initial Cost] × 100ROI is the most common way to measure how well an investment is performing. It tells you exactly how much profit you've made as a percentage of your original cost.
Simple ROI doesn't consider time. A 20% ROI over one month is incredible, but a 20% ROI over ten years is poor. When comparing investments, always look at the annualized return to see how your money is working for you over time.
ROI reflects profitability but ignores risk. A high-ROI investment might have a high chance of failure. Professional investors look for "Risk-Adjusted Returns" to ensure the reward is worth the potential loss.
Example: Invest $1,000, get back $1,250 = 25% ROI