Return on Investment(ROI) Calculator

What is an ROI Calculator?

An ROI calculator helps investors determine the return on their investment by calculating the gain or loss, ROI percentage, simple annual ROI, and compound annual ROI. It takes into account the amount invested, amount returned, and the investment period in years.

How is ROI Calculated?

The calculation uses the following formulas to compute the gain or loss, ROI, simple annual ROI, and compound annual ROI:

Gain or Loss = Amount Returned - Amount Invested
ROI = (Gain or Loss / Amount Invested) * 100
Simple Annual ROI = ROI / Investment Period Years
Compound Annual ROI = (Math.pow((Amount Returned / Amount Invested), (1 / Investment Period Years)) - 1) * 100

Where:

• Amount Invested: The initial amount of money invested
• Amount Returned: The amount of money received after the investment period
• Investment Period Years: The total duration of the investment in years
• Gain or Loss: The difference between the amount returned and the amount invested
• ROI: The return on investment expressed as a percentage
• Simple Annual ROI: The ROI divided by the investment period in years
• Compound Annual ROI: The annual growth rate of the investment, accounting for compounding

The gain or loss is calculated by subtracting the amount invested from the amount returned. The ROI is calculated by dividing the gain or loss by the amount invested and multiplying by 100. The simple annual ROI is calculated by dividing the ROI by the investment period in years. The compound annual ROI is calculated using the compound interest formula.

Benefits of an ROI Calculator

• Investment Evaluation: Helps investors evaluate the performance of their investments.
• Financial Planning: Assists in planning future investments by understanding potential returns.
• Informed Decisions: Provides valuable insights for making informed investment decisions.
• Performance Comparison: Enables comparison of different investments based on their returns.

Example Calculation

Using the formulas:

Gain or Loss = Amount Returned - Amount Invested
ROI = (Gain or Loss / Amount Invested) * 100
Simple Annual ROI = ROI / Investment Period Years
Compound Annual ROI = (Math.pow((Amount Returned / Amount Invested), (1 / Investment Period Years)) - 1) * 100

Let's take an example to illustrate:

• Amount Invested: ₹5,00,000
• Amount Returned: ₹7,00,000
• Investment Period: 5 years

Using these details, the ROI calculator helps investors understand their gain or loss, ROI, simple annual ROI, and compound annual ROI:

Gain or Loss = ₹7,00,000 - ₹5,00,000 = ₹2,00,000
ROI = (₹2,00,000 / ₹5,00,000) * 100 = 40%
Simple Annual ROI = 40% / 5 = 8%
Compound Annual ROI = (Math.pow((₹7,00,000 / ₹5,00,000), (1 / 5)) - 1) * 100 ≈ 6.96%

Learn more at TheWealthWeb