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Finance formula

How to calculate return on investment

ROI shows how much profit or loss an investment produced compared with the money put in.

See the formulaOpen calculator
Direct answer
Formula
ROI = (gain - cost) / cost * 100

Use the table below to match each symbol with the right input. Keep units consistent before you start.

Return on investment formula
Start here when you only need the equation and variable names.
Formula
ROI = (gain - cost) / cost * 100

ROI shows how much profit or loss an investment produced compared with the money put in.

Variable meanings
Check each symbol, meaning, and unit before you calculate.
SymbolNameDescriptionUnit
gainGainEnding value plus income received.currency
costCostInitial amount invested.currency
When to use this formula
Check that your situation matches the formula before you trust the result.
  • Good for a first-pass comparison of projects, properties, campaigns, or purchases with a known cost and gain.
Step-by-step method
Follow these steps when you are solving it by hand.
  1. 1Subtract the original cost from the ending value or total proceeds.
  2. 2Divide the net gain by the original cost.
  3. 3Multiply by 100.
  4. 4Compare only investments measured over a similar time period.
Examples
These sample numbers show the order of operations and units.
Positive ROI
gain
$62,000
cost
$50,000
  1. 1.ROI = (62000 - 50000) / 50000 * 100
  2. 2.ROI = 12000 / 50000 * 100
  3. 3.ROI = 24%
Result
The investment returned 24%.
Negative ROI
gain
$190,000
cost
$200,000
  1. 1.ROI = (190000 - 200000) / 200000 * 100
  2. 2.ROI = -10000 / 200000 * 100
  3. 3.ROI = -5%
Result
The investment lost 5%.
Mistakes to avoid
Small input or unit errors can change the answer a lot.
  • Using an annual rate where the return on investment formula needs a monthly or period rate.
  • Entering 8 instead of 0.08 when the formula calls for a decimal rate.
  • Comparing results across different time periods without converting them first.
  • Rounding each step instead of rounding the final answer.
Open the Real Estate ROI Calculator
Open the calculator for the answer without rewriting the formula.

Enter your values in the related calculator, then compare the output with the hand method above.

Open Real Estate ROI Calculator
FAQs
Short answers for common formula questions.
Can I calculate Return on investment by hand?

Yes. Write the units next to each value, convert rates or measurements first, and round only the final answer.

Why does my Return on investment result differ from another calculator?

Most differences come from rounding, unit conversions, rate timing, or a slightly different version of the formula.

When is the Investment ROI Calculator better than hand math?

Open the Investment ROI Calculator to check several scenarios or skip the hand arithmetic.