1. What is Return on Yield (ROY)?

Definition: Return on Yield measures the percentage return on an investment based on annual income.

Purpose: It helps investors evaluate the profitability of an investment relative to its cost.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( ROY \) — Return on Yield (percentage)
• \( Income \) — Annual income from investment (USD)
• \( Investment \) — Initial investment amount (USD)

Explanation: The annual income is divided by the initial investment to get the return ratio, then multiplied by 100 to convert to percentage.

3. Importance of Return on Yield

Details: ROY helps compare different investment opportunities and assess whether an investment meets financial goals.

4. Using the Calculator

Tips: Enter the annual income and initial investment in USD. Investment must be greater than 0.

5. Frequently Asked Questions (FAQ)

Q1: What's considered a good ROY?
A: This varies by industry, but generally 10%+ is good, 15%+ is excellent, and 5% might be acceptable for low-risk investments.

Q2: How is ROY different from ROI?
A: ROY focuses on annual yield, while ROI typically measures total return over the investment period.

Q3: Should I include taxes in the income?
A: For personal finance, use after-tax income. For business analysis, pre-tax may be more appropriate.

Q4: Can ROY be negative?
A: Yes, if the investment generates a loss (negative income), the ROY will be negative.

Q5: How often should I calculate ROY?
A: For ongoing investments, calculate annually to track performance over time.