Return on investment formula

Return on investment is a term that refers to an approximation for the profitability of an investment. Return on investment is calculated by dividing net profit by cost of investment.


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Return on Investment or ROI is a financial ratio that helps in determining the profitability from a particular investment.

. The formula for return on investment sometimes referred to as ROI or rate of return measures the percentage return on a particular investment. Ad Your Investments Done Your Way. ROI is relevant for both equity and fixed income.

You can apply ROI to stock investments businesses and real estate. ROI Formula ROI Gross Return Cost of Investment Cost of Investment ROI Net Return Cost of Investment. The basic formula for ROI is.

ROI is used to measure profitability for a. The Return on Investment formula is as introduced in the following image. The return on investment formula is a simple mathematical expression to calculate the ROI of an investment.

ROI Gain from Investment - Cost of Investment Cost of Investment As a most basic example Bob wants to calculate the ROI on his sheep farming. To calculate this ratio you simply subtract the initial cost of the investment from. If you look at the above example the ROI formula would.

Net profit is the difference between the gain and the expenses of the investment. Return on Investment Investment Revenue - Cost of Investment Cost of Investment. Ad Understand The Potential Returns You Might Receive From Investments.

Unique Tools to Help You Invest Your Way. The return on investment formula To calculate your ROI divide the net profit from your investment by the investments initial cost then multiply the total by 100 to get a. Considering the formula we see that the ROI calculation depends on two components that.

Calculate Your Potential Investment Returns With the Help of AARPs Free Calculator.


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