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Home / Calculators / ROI Calculator

Free ROI Calculator

Calculate net profit, ROI percentage, annualized ROI, NPV, and payback period. Evaluate investment performance and compare opportunities.

dollars ($)
dollars per year ($)
dollars per year ($)
years
annual rate (%)
Please enter valid investment details.
ROI Summary
$0.00
Net Profit
0%
Total ROI
0%
Annualized ROI
$0.00
Net Present Value
0 yrs
Payback Period
Cash Flow Chart

How to Use the ROI Calculator

1

Enter Investment Details

Enter your initial investment, annual revenue, annual operating costs, and the time period in years.

2

Set Discount Rate

Optionally adjust the discount rate for NPV calculation. The default is 10%.

3

View Results

Click "Calculate" to see your net profit, ROI, annualized ROI, NPV, payback period, and cash flow chart.

About ROI

ROI (Return on Investment) measures the profitability of an investment relative to its cost. The basic formula is: ROI = (Net Profit / Initial Investment) × 100. Net profit is calculated as total cash flows minus the initial investment over the specified time period. For related calculations, try our Interest Calculator or Loan Calculator.

Annualized ROI normalizes the return to a per-year basis, making it easier to compare investments of different durations. It uses the compound annual growth rate formula: (1 + total ROI)^(1/years) - 1.

Net Present Value (NPV) discounts future cash flows back to their present value using the discount rate, accounting for the time value of money. A positive NPV means the investment is expected to generate more value than its cost.

Payback Period indicates how long it takes to recover the initial investment from net cash flows. A shorter payback period is generally preferred as it means faster capital recovery.

  • Positive ROI: The investment generated more than it cost — a profitable outcome.
  • Negative ROI: The investment returned less than its cost — a net loss.
  • NPV considerations: A higher discount rate reduces the present value of future cash flows, making positive NPV harder to achieve.

For more on investment analysis, read Investopedia's ROI Guide or visit Corporate Finance Institute.

Frequently Asked Questions

ROI (Return on Investment) measures the profitability of an investment relative to its cost. The basic formula is: ROI = (Net Profit / Initial Investment) × 100. A positive ROI means the investment generated more than it cost, while a negative ROI indicates a loss.

ROI calculates the total return over the entire investment period, while annualized ROI normalizes the return to a per-year basis, making it easier to compare investments of different durations. For example, a 50% ROI over 5 years equates to approximately an 8.45% annualized ROI.

Net Present Value (NPV) is the difference between the present value of cash inflows and outflows over a period of time, discounted at a specific rate. A positive NPV indicates the investment is expected to generate more value than its cost, accounting for the time value of money.

The payback period is the length of time required to recover the initial investment from the net cash flows generated by the investment. For example, a $50,000 investment generating $15,000 annual net cash flow has a payback period of approximately 3.33 years. Shorter payback periods indicate faster capital recovery.

Yes, it is completely free. No registration, downloads, or payments are required. You can use it unlimited times for personal, educational, or professional investment analysis.

No. All calculations happen locally in your browser. Your investment amounts, cash flow figures, and other financial data never leave your device. We do not store, track, or have access to any information you enter.

The discount rate should reflect the opportunity cost of capital or your required rate of return. Common approaches include using the current interest rate on alternative investments, your company's weighted average cost of capital (WACC), or a target return rate.

A “good” ROI varies by industry and risk level. Generally, an ROI above 10% annually is considered reasonable. Stock market historical averages are around 7–10% annually. Higher-risk investments typically demand higher potential ROIs. Always compare ROI against alternatives with similar risk profiles.