1. What is ROI Percentage Calculator?

Definition: This calculator measures the return on investment as a percentage, comparing the gain from an investment to its cost.

Purpose: It helps investors and business owners evaluate the efficiency of an investment or compare different investment opportunities.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( ROI \) — Return on investment (percentage)
• \( R \) — Return from investment (currency)
• \( C \) — Cost of investment (currency)

Explanation: The formula calculates the net return (R - C) relative to the investment cost, expressed as a percentage.

3. Importance of ROI Calculation

Details: ROI helps in decision-making by quantifying the profitability of investments, allowing comparison between different investment options.

4. Using the Calculator

Tips: Enter the total return (gross amount received) and the total cost of investment. Cost must be greater than 0.

5. Frequently Asked Questions (FAQ)

Q1: What does a negative ROI mean?
A: A negative ROI indicates a net loss on the investment (return was less than the cost).

Q2: What's considered a good ROI?
A: This varies by industry, but generally an ROI above 10-15% is considered good for most investments.

Q3: Should ROI be annualized?
A: For comparing investments of different durations, annualizing ROI provides better comparison.

Q4: Does ROI account for time value of money?
A: No, basic ROI doesn't consider the time period. For time-adjusted returns, consider using IRR (Internal Rate of Return).

Q5: What costs should be included?
A: Include all costs associated with the investment - purchase price, fees, maintenance, etc.