ROI Calculator
Measure return on investment after purchase costs, fees and cash income. Compare net profit, annualized return, tax impact, inflation, break-even value and target value.
Last Updated: July 22, 2026Calculate Return on Investment
Use consistent gross or net figures. Add every material cost once to avoid overstating your return.
Enter valid figures and select Calculate ROI.
| Terminal-value scenario | Terminal value | Net profit | ROI | Annualized return | After-tax ROI |
|---|
Annualized return treats total proceeds as though they arrive at the end of the period. If cash income arrived on different dates, use XIRR for a time-weighted cash-flow estimate.
What Is Return on Investment?
Return on investment, or ROI, measures profit or loss against the total amount committed. It answers a direct question: how much did you gain or lose for each unit of cost?
ROI works for shares, mutual funds, property, equipment, marketing campaigns, business projects, training programs and other decisions with measurable costs and benefits. A positive ROI means proceeds exceeded costs. A negative ROI means the investment returned less than it cost.
The percentage is useful because it puts different-sized decisions on a common scale. A ₹10,000 profit on ₹50,000 is a 20% ROI. The same ₹10,000 profit on ₹2,00,000 is only 5%. The cash gain is equal, but capital efficiency is different.
How to Use This ROI Calculator
- Select the currency used for every monetary input.
- Enter the initial purchase price, startup capital or project outlay.
- Add the current, sale or terminal value. Use zero if no residual value remains.
- Enter fees and other costs not included in the initial amount.
- Add cash income such as dividends, rent, distributions or operating cash profit.
- Enter the actual holding period in years and extra months.
- Add an effective tax rate and inflation assumption if you want planning estimates.
- Enter your target total ROI, then select Calculate ROI.
Review total ROI first. Then check net profit, annualized return, after-tax ROI, real return and the scenario table. If you compare two options, use the same treatment for fees, tax, income and valuation.
ROI Formula
Total cost basis = Initial investment + Additional costs
Total proceeds = Terminal value + Cash income
Net profit = Total proceeds − Total cost basis
ROI = Net profit ÷ Total cost basis × 100
Worked ROI Example
Assume you invest ₹1,00,000, pay ₹5,000 in fees, receive ₹10,000 in cash income and sell after three years for ₹1,40,000.
- Total cost basis: ₹1,05,000
- Total proceeds: ₹1,50,000
- Net profit: ₹45,000
- ROI: ₹45,000 ÷ ₹1,05,000 × 100 = 42.86%
- Annualized return: about 12.62%
ROI is 42.86% for the full three-year period. It is not 42.86% per year. Annualization converts the total proceeds-to-cost ratio into a comparable yearly rate.
ROI vs Annualized ROI, CAGR, IRR and XIRR
| Metric | What it measures | Uses time? | Handles multiple dated cash flows? |
|---|---|---|---|
| ROI | Total profit or loss relative to cost | No | Not accurately |
| Annualized ROI | Equivalent compounded yearly rate from cost to proceeds | Yes | No |
| CAGR | Smoothed yearly growth between one start and one end value | Yes | No |
| IRR | Rate that sets periodic project cash flows to zero net present value | Yes | Yes, equal intervals |
| XIRR | Annualized rate for irregular cash flows with exact dates | Yes | Yes |
Use ROI for a simple total-return check. Use the CAGR Calculator for one beginning and ending value. Use the XIRR Calculator when contributions, withdrawals or income occur on different dates.
How Annualized ROI Is Calculated
Annualized return = (Total proceeds ÷ Total cost basis)1 ÷ years − 1
A 50% ROI earned in one year is different from 50% earned in ten years. Annualization makes the holding period visible. It also assumes positive proceeds and treats all proceeds as a final-period value.
If the proceeds-to-cost ratio is 1.4286 across three years, annualized return is about 12.62%. This rate compounded for three years would produce the same final ratio. If total proceeds are zero, the total loss is 100% and a standard annualized figure is not shown.
Include Every Material Cost and Benefit
ROI changes when you omit an expense or count income inconsistently. Common costs include purchase fees, brokerage, platform charges, maintenance, repairs, financing costs, taxes, shipping, advertising spend, software, staff time and closing expenses. Common benefits include sale value, dividends, rent, rebates, recovered working capital and cash profit.
For investment products, the SEC explains that fees and expenses reduce investment returns. Review product charges and avoid comparing a gross return from one option with a net return from another. See the SEC's guide to fund fees and expenses.
Opportunity cost is harder to include. If the same capital might have earned 7% elsewhere, a positive 5% return has a positive accounting ROI but underperforms the alternative. Compare the result with a relevant benchmark and risk level.
After-Tax ROI and Real Return
After-Tax ROI
The calculator applies your effective tax input only to positive profit. Estimated tax equals positive net profit multiplied by the entered rate. After-tax ROI equals profit after estimated tax divided by cost basis.
This is a planning shortcut. Actual tax depends on country, asset type, holding period, deductions, losses, tax status and other rules. Do not use a headline tax rate without checking whether it applies to your transaction.
Real Annualized Return
Inflation reduces purchasing power. The calculator estimates real annualized return with:
Real annualized return = (1 + annualized return) ÷ (1 + inflation) − 1
If the annualized return is 12.62% and inflation is 6%, real annualized return is about 6.25%. The exact formula divides growth factors. Simple subtraction gives only an approximation.
Break-Even Value and Target ROI
The break-even terminal value is the amount still needed after cash income to recover total cost basis. If cost basis is ₹1,05,000 and cash income is ₹10,000, the terminal value needed to break even is ₹95,000.
The target terminal value works backward from your desired ROI:
Target terminal value = Cost basis × (1 + target ROI) − Cash income
For a 50% target ROI on ₹1,05,000 of cost with ₹10,000 of cash income, the required terminal value is ₹1,47,500. This target is before tax unless you separately adjust the required return.
Using ROI for Business and Marketing
For a business project, the initial investment might include equipment, development and launch cost. Additional costs might include maintenance and staff time. Terminal value might include resale value, while cash income represents cumulative operating cash benefit.
Marketing ROI needs a consistent profit basis. Revenue generated is not the same as profit generated. If a campaign costs ₹1,00,000 and produces ₹1,50,000 of revenue with a 40% gross margin, the contribution before campaign cost is ₹60,000. The campaign loses ₹40,000 on that basis, even though revenue exceeds ad spend.
ROAS measures revenue divided by ad spend. ROI measures profit after relevant costs divided by cost. Browse the Business, Ecommerce & Marketing Calculators for tools focused on advertising and business performance.
Common ROI Mistakes
- Ignoring time: compare annualized returns when holding periods differ.
- Leaving out fees: include all material purchase, holding and sale costs.
- Using revenue as profit: deduct the costs required to produce that revenue.
- Double-counting income: do not add cash income already included in the terminal value.
- Using an unrealized estimate as cash: label current valuations clearly.
- Ignoring tax and inflation: nominal pre-tax ROI may overstate what you keep.
- Comparing different risk levels: a higher ROI does not automatically make an option better.
- Treating historical ROI as a forecast: prior results do not guarantee future performance.
Limitations of This Calculator
The tool assumes one initial cost basis, one terminal value and one combined cash-income figure. Its annualized return treats all proceeds as though they arrive at the end. It does not model exact cash-flow dates, financing schedules, depreciation, reinvestment, changing tax rates, risk, volatility or discount rates.
The scenario table changes terminal value by 10% below and above your base input. It does not predict market outcomes. For a project with several dated inflows and outflows, build a cash-flow schedule and use IRR, XIRR or net present value.
Related Calculators
Frequently Asked Questions
What does ROI stand for?
ROI stands for return on investment. It measures net profit or loss as a percentage of total investment cost.
How do I calculate ROI?
Subtract total cost basis from total proceeds. Divide the resulting profit or loss by total cost basis, then multiply by 100.
What is a good ROI?
There is no universal good ROI. Compare the result with time, inflation, tax, risk, liquidity and a relevant alternative or benchmark.
Can ROI be negative?
Yes. ROI is negative when total proceeds are below total cost basis. A negative ROI shows the percentage of invested cost lost.
Does ROI include time?
Basic ROI does not include time. Use annualized return, CAGR, IRR or XIRR when the holding period or cash-flow timing matters.
Should fees be included in ROI?
Yes. Include material fees, commissions, repairs, maintenance and transaction costs unless they are already deducted from your proceeds.
What is the difference between ROI and profit?
Profit is a currency amount. ROI expresses the same profit or loss relative to total cost as a percentage.
Is ROI the same as ROAS?
No. ROAS normally divides advertising revenue by ad spend. ROI uses profit after relevant costs and compares it with total investment cost.
Does this ROI calculator account for taxes?
It provides an optional estimate using your effective rate on positive profit. It does not determine which tax rules or rates apply to you.
Financial disclaimer: This calculator provides educational estimates, not investment, tax, legal, accounting or financial advice. Results depend on your inputs and simplified timing assumptions. Verify costs, cash flows, taxes and valuations before making a decision.