DIY Cost Tools
ROI Calculator
FINANCIAL CALCULATOR
Calculate net profit, total return on investment, and annualized return from starting cost, ending value, additional costs, income, and time.
How it works
Total ROI compares net profit with all invested capital. Annualized ROI converts the total growth factor to an equivalent yearly rate.
Formula
ROI = (ending value + income − initial investment − costs) ÷ (initial investment + costs)
Annualized ROI = (final proceeds ÷ total invested)1/years − 1
Important limits
- Timing of intermediate cash flows is simplified.
- Taxes, inflation, risk, and opportunity cost are not included.
- For irregular cash flows, an IRR calculation may be more appropriate.
Frequently asked questions
Can ROI be negative?
Yes. A negative result means the final proceeds were less than the total amount invested.
Why annualize ROI?
It helps compare investments held for different lengths of time.
Interpreting return on investment
ROI compares net gain with the amount invested: subtract the investment cost from the ending value or proceeds, divide by the cost, and express the result as a percentage. Include fees, taxes, maintenance, and other material costs when they belong to the decision; excluding them can overstate the return.
Basic ROI does not account for how long the investment was held or when cash flows occurred. A 20% return over one year is not equivalent to 20% over five years. For investments with multiple deposits, withdrawals, or income payments, consider an annualized return, internal rate of return, or time-weighted measure. Compare alternatives using consistent assumptions and remember that a calculated historical or projected ROI does not guarantee a future outcome.
Review notes
The calculator reports both simple and compounded annualized returns. Last reviewed September 30, 2026.