1. What is ROR vs ROI Calculator?

Definition: This calculator compares two key financial metrics: Rate of Return (ROR) and Return on Investment (ROI).

Purpose: It helps investors and business owners evaluate the performance of their investments in different ways.

2. How Does the Calculator Work?

The calculator uses these formulas:

Where:

• \( ROR \) — Rate of Return (currency/year, e.g., USD/year)
• \( ROI \) — Return on Investment (%)
• \( R \) — Return (currency, e.g., USD)
• \( C \) — Cost (currency, e.g., USD)
• \( t \) — Time (years)

Explanation: ROR shows annualized profit, while ROI shows percentage return relative to initial cost.

3. Importance of ROR and ROI

Details: ROR helps compare investments with different timeframes, while ROI shows efficiency of capital use regardless of time.

4. Using the Calculator

Tips: Enter the total return amount, initial cost, and investment period in years. All values must be > 0.

5. Frequently Asked Questions (FAQ)

Q1: Which is better - ROR or ROI?
A: Both are important. ROR is better for comparing investments with different timeframes, while ROI shows overall efficiency.

Q2: What's a good ROI percentage?
A: Typically 7-10% is good for stocks, 15-20% for businesses, but depends on risk and industry standards.

Q3: Can ROR be negative?
A: Yes, if returns are less than cost, both ROR and ROI will be negative indicating a loss.

Q4: Should I include all costs in C?
A: Yes, include all initial investment costs for accurate calculations.

Q5: How does time affect these metrics?
A: Longer time periods reduce ROR (annualized) but don't affect ROI which is time-independent.