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ROI Calculator
Return on investment, annualised ROI and payback period for any project or campaign.
BusinessInputs
Results
Formula
- Net profit = Return − Cost − (Running cost × years)
- ROI = Net profit / Total cost × 100
- Annualised ROI = [(1 + ROI)^(1/t) − 1] × 100
- Payback period = Total cost / (Net profit / years)
ROI expresses profit as a percentage of the capital committed, which makes projects of different sizes comparable. Annualising it is essential: a 60% return earned over four years is a mediocre 12.5% a year, while the same 60% in one year is exceptional. Payback tells you how long the capital is at risk.
Step-by-step Calculation
- 1.Total cost
500,000 + 0 × 2₹500,000 - 2.Net profit
800,000 − 500,000₹300,000 - 3.ROI
profit / cost × 10060.0% - 4.Annualised
(1 + ROI)^(1/2) − 126.49%
Assumptions
- • Returns are realised evenly over the period
- • No discounting of future cashflows (use NPV/IRR for long projects)
Money Tips
- ◆For projects longer than two years, complement ROI with NPV at your cost of capital.
- ◆Include the opportunity cost of capital in the running cost to get an economic, not accounting, return.
Warnings
- ▲Simple ROI ignores the time value of money and can favour slow projects that look large in total.
References & Standards
Return on investment (management accounting)Payback period analysis
Results are planning estimates generated in your browser. Nothing you enter is uploaded or stored. Verify material decisions with your lender, adviser or chartered accountant.