# Return on Investment Calculator

## ROI and Annualized ROI

This calculator can be used to quantify a gain or loss on investment, as well as the overall return on investment (ROI) and annualized ROI. To do this, the calculator requires four inputs:

• The amount of the original investment
• The start date of the investment using the format mm/dd/yyyy
• The returned value, which is the total value of the asset at the end of the investment timeline
• The investment end date using the format mm/dd/yyyy

The calculator then provides the user with the following information:

• The total gain or loss on the investment
• The investment term, which is the total timeframe between the start and end date, stated in years
• The total return on investment (ROI)
• The simple annualized ROI, which is the total ROI divided by the investment term

### Calculating Investment Profitability

Return on investment, or more commonly ROI, is one of several metrics financial analysts use to determine the profitability of an investment. Similar metrics include internal rate of return, payback, net present value, and total cost of ownership. ROI is calculated by taking the gain or loss on the investment and dividing it by the original investment value. Generally, positive values represent a gain on an investment, while a loss is indicated by negative values. Gains will always have ROI values that are positive, while losses will have negative ROI values.

### The Importance of Annualized ROI Values

While understanding an investment’s ROI is important, it is equally important to understand the timeframe over which the ROI occurred. Therefore, we also want to calculate the simple annualized ROI. This value allows us to make fair comparisons between alternative investments. For example, an investment with an RIO of 21% over the course of three years has an annualize ROI value of 7%, while an investment with an ROI of 20% over the course of two years has an annualized ROI value of 10%.