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## What is ROI?

ROI or as it is sometimes known as the Return on Investment happens to be an investor’s benefit which results from the investment of some or the other resource. When we say that there is high ROI or the rate of investment then it means that the investment gains favour the investment cost.

## Return on Investment(ROI) Calculator

Hence, this ROI or the return of investment is generally used as a performance measure which assists in evaluating efficiency of the investment or it is also put in to use to compare efficiency of a number of (various) investments. In other words, this is also one of the methods through which we can know the profits when the capital is invested.

## How is ROI calculated?

As we have stated above that this return of investment turns out to be a measure to check the profits when compared to the investment thus, to calculate this ROI, the return or in other terms, the benefit of investment is usually divided by the cost of investment. One will be able to understand it better when they check the formula given below.

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**Return of investment / ROI formula:**

\(ROI = \frac{(Gain \quad from \quad investment – Cost \quad of \quad investment)}{Cost \quad of \quad investment}\)

Here, gain from investment means that the proceeds received when the investment of interest is sold.

## How to use an ROI or the return of investment calculator?

To make use of the return of investment calculator, one will have to firstly enter the amount that has been invested & this is followed by the amount returned. In the next fields, you would be required to mention the start as well as the end date. Later on the gain or loss is to be entered apart from the annualized return & number of years. Finally click on calculate to get the result.