Free ROI calculator

Q: How can I calculate ROI in Excel or Google Sheets?

Place investment cost in A1 and amount returned in B1. Use =(B1-A1)/A1 and format the cell as a percentage. If years are in C1, simple annual ROI is =((B1-A1)/A1)/C1 , and CAGR is =(B1/A1)^(1/C1)-1 . Format those as percentages too; do not also multiply by 100. For an assumed future growth rate, =FV(rate,years,0,-initial_amount) models annual compounding without extra contributions.

Enter the amount invested, amount returned and investment period to calculate gain, simple ROI, annualized ROI and CAGR.

Compare return with investmentSee the gain and return percentage from the same inputs.

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Return on investment

How to use the return on investment calculator

Compare the money committed to a project with the value it returns. This calculator shows the gain in dollars, total ROI, simple annual ROI and compound annual growth rate. Use the same cost definition and time period for each scenario; a return percentage alone cannot describe risk, cash-flow timing or the work required.

Enter the full investment
Include the purchase or project outlay and any associated setup costs that belong in this comparison. Keep currency and treatment of taxes consistent.
Enter the amount returned
Use final value plus included proceeds, net of costs not already counted. Enter total value returned, not only the profit; subtracting the investment twice would understate ROI.
Choose the elapsed period
Use years, including a decimal for part of a year: six months is 0.5 years. The period affects annual figures but does not change total ROI.
Read all four results
Review gain, total ROI, simple annual ROI and CAGR together. A large annualized number over a short project is a mathematical comparison, not a promise of repeatable annual returns.
Compare the chart and assumptions
Use the visual breakdown to distinguish original investment from gain. Record the inputs alongside the numbers so the calculation can be reproduced.
Change one assumption at a time
Compare a lower proceeds case, a higher cost case and a longer holding period. Record scenarios in your planning worksheet when you need a permanent comparison.

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What an ROI calculation can—and cannot—tell you

ROI answers a narrow but useful question: how much gain or loss did a project produce relative to the cost included in the calculation? It can help compare an advertising campaign, a machine purchase or a property project without confusing a larger dollar gain with a better percentage return.

Quick arithmetic: change cost or proceeds and see the effect without rebuilding a formula.
Consistent definitions: separate the amount returned from the net gain and avoid subtracting the original investment twice.
Time-aware comparisons: distinguish the total result from a simple per-year average and a compounded annual equivalent.
Scenario planning: identify how a higher cost, delayed completion or weaker sale changes the outcome.

The calculator does not forecast future market prices, attribute sales to an advertisement, calculate a tax return or recommend an investment. Its answer is only as useful as the scope of costs and proceeds you supply. A positive ROI can still be unattractive if it requires excessive risk, years of illiquidity or substantial unpaid labor.

ROI formula, cost basis and the meaning of gain

Let C be the total investment cost and V be the final amount returned under the chosen scope. For a simple beginning-to-end comparison:

Gain = V − C
ROI (%) = (V − C) ÷ C × 100
Final value at a target ROI = C × (1 + ROI ÷ 100)

For example, an investment cost of $4,000 and a final return of $4,800 create an $800 gain. ROI is $800 ÷ $4,000 × 100 = 20%. If final value is $3,600, the $400 loss gives −10% ROI. The gain is the difference, not another name for the entire $4,800 returned.

Input	Include where relevant	Avoid
Investment cost	Purchase, installation, campaign production, transaction fees and directly attributable setup	Leaving out an expense simply because it was paid from another account
Amount returned	Sale proceeds, remaining asset value and included operating proceeds under a consistent definition	Treating gross revenue as profit when fulfillment costs remain unpaid
Period	Actual start-to-end elapsed time expressed in years	Comparing a three-month result with a three-year result as though timing were equal

Decide whether taxes, financing and owner labor are inside or outside the model, and label that choice. For a property bought with debt, return on the whole asset and return on the owner's equity use different denominators. Do not mix the down payment as cost with a sale price before mortgage repayment as return.

When cost is zero, a standard percentage ROI has no finite denominator. Report the dollar result and explain the situation instead of interpreting a displayed zero as a meaningful investment return.

Total ROI, simple annual ROI and CAGR

Time changes interpretation. Earning 20% over six months and earning 20% over five years are equal total percentages, but not equal annual results. There are two commonly used ways to express an annual comparison, and they should not be labeled as interchangeable.

Simple annual ROI (%) = total ROI (%) ÷ years
CAGR (%) = [(V ÷ C)^{1 ÷ years} − 1] × 100

Measure	Question it answers	Important limitation
Total ROI	What is the total gain relative to the initial cost?	Does not account for how long the investment lasted
Simple annual ROI	What is total ROI divided evenly by the number of years?	Arithmetic average; does not model reinvestment
CAGR	What constant compounded annual rate connects the beginning and ending values?	Smooths the path and does not describe interim volatility or individual cash-flow dates

For $10,000 growing to $12,100 over two years, total ROI is 21%, simple annual ROI is 10.5%, and CAGR is 10%. Compounding checks the result: $10,000 × 1.10 × 1.10 = $12,100.

For a six-month result, the exponent in CAGR is 1 ÷ 0.5 = 2. That annualizes the observed change mathematically. It does not mean the same campaign or asset can produce the same return twice in succession.

Cash-flow timing matters. If there are substantial deposits, withdrawals, rent payments or distributions during the period, simple endpoint CAGR does not measure their timing. A dated-cash-flow method such as XIRR or a suitable discounted cash-flow model may be needed. Label any endpoint approximation clearly.

For forward-looking illustrations, use an assumed growth rate and show uncertainty. Investor.gov's compound-interest calculator separates initial investment, contributions, time and rate assumptions; changing those inputs can materially change the projection.

Use the results to compare realistic alternatives

Start with one documented base case. For equipment, keep the supplier quote, installation estimate and maintenance assumptions. For marketing, record advertising spend, creative costs, attributable customer receipts and the cost of delivering those sales. For property, keep purchase, improvement, financing and operating cash flows distinct.

Define the decision. State whether you are evaluating a completed project or planning a future one.
Build a complete cost basis. Assign fees, setup and continuing expenses consistently; do not count the same item in both cost and net proceeds.
Choose the return measure. Use actual receipts for a completed sale, or clearly mark estimated ending value for an unsold asset.
Review dollars before percentages. A 100% return on $100 creates less dollar gain than a 10% return on $10,000.
Run a downside case. Reduce proceeds, extend the period or add a known maintenance expense. Keep a short explanation beside each scenario.
Consider constraints outside ROI. Check cash availability, risk, capacity, alternative uses of funds and whether the project fits the business.

The page provides live calculations and a visual result. It does not claim to keep a multi-project investment ledger or export a saved scenario library. Use a spreadsheet or accounting system when those records are required.

Calculator, spreadsheet or accounting records?

These tools serve different purposes. A calculator is convenient for a small comparison; a spreadsheet can model detailed timing; accounting records establish what actually happened. None is automatically more accurate simply because it is more elaborate.

Requirement	This ROI calculator	Spreadsheet	Accounting records or software
Initial setup	Enter investment, return and period	Define inputs, formulas and labels	Record and classify the underlying transactions
Annual comparisons	Total ROI, simple annual ROI and CAGR	Can include CAGR, XIRR and discounted cash flows	Depends on the reporting tools and classifications
Visual explanation	Live cost-and-gain presentation	Custom tables and charts	Product-specific reporting and dashboards
Several scenarios	Change inputs and record results externally	Separate scenario columns or a structured model	Budgets and project reports where supported
Record keeping and export	Not a permanent transaction ledger or CSV scenario archive	Save the workbook and export supported formats	Maintain auditable records and use available exports

A spreadsheet can create interactive charts; accounting software can include sophisticated analysis. The right choice depends on the question. Use source invoices and records to support either approach rather than treating a polished chart as evidence by itself.

Common mistakes that can change the answer

Comparing unlike costs: one scenario includes setup and the other does not.
Using sales instead of net project proceeds: advertising-generated revenue still has product or service delivery costs.
Omitting fees and taxes: a pre-tax result may differ from money retained after a sale.
Ignoring time: identical total ROI over different periods does not mean identical performance.
Mixing simple and compound annual rates: ROI divided by years is not CAGR.
Losing the residual asset: rent alone is not the entire return if the property still has value.
Assuming repetition: annualizing a short period is not a forecast.

For a business decision, retain both the calculation and its assumptions. Review the outcome against actual receipts and spending later so the next estimate improves. This is educational planning information, not individualized investment, tax or accounting advice.

Three complete ROI calculations

Illustrative calculations, not market quotes. Replace these assumptions with your own costs and measurements.

A six-month marketing project

A service business spends $6,000 on a campaign, including advertising and creative work. It attributes $15,000 of customer revenue to the campaign and spends $6,000 delivering those services. The return available to compare against campaign cost is therefore $9,000, not the $15,000 gross revenue.

Net campaign-related proceeds = $15,000 − $6,000 = $9,000.
Gain after campaign investment = $9,000 − $6,000 = $3,000.
Total ROI = $3,000 ÷ $6,000 = 50%.
Simple annual ROI = 50% ÷ 0.5 = 100%.
CAGR equivalent = [(9,000 ÷ 6,000)² − 1] × 100 = 125%.

Attribution and delivery-cost assumptions should be documented. The annual figures do not guarantee that another six-month campaign will achieve the same result. Using advertising spend alone against revenue would be a different metric, not this net-project ROI.

Gain: $3,000 · ROI: 50% · Simple annual: 100% · CAGR equivalent: 125%

A machine evaluated over three years

A machine costs $40,000 installed. Over three years, estimated operating savings after added maintenance total $52,000, and its remaining resale value is $8,000. Combined benefits for an endpoint comparison are $60,000.

Amount returned in this model = $52,000 + $8,000 = $60,000.
Gain = $60,000 − $40,000 = $20,000.
ROI = $20,000 ÷ $40,000 = 50%.
Simple annual ROI = 50% ÷ 3 = 16.67%.
Endpoint CAGR = [(60,000 ÷ 40,000)^1/3 − 1] × 100 = 14.47%.

Because the operating savings arrive during the three years rather than entirely at the end, the CAGR figure is only an endpoint approximation. Use dated cash flows for a timing-sensitive investment appraisal and include financing consistently if relevant.

Gain: $20,000 · ROI: 50% · Endpoint CAGR: 14.47%

A rental-property endpoint comparison

An unleveraged property project costs $240,000 including purchase and improvements. After two years, its estimated net sale value is $252,000 after sale costs, and net rental receipts after operating costs total $24,000. Financing and personal income tax are excluded from this example.

Total included return = $252,000 + $24,000 = $276,000.
Gain = $276,000 − $240,000 = $36,000.
ROI = $36,000 ÷ $240,000 = 15%.
Simple annual ROI = 15% ÷ 2 = 7.5%.
Endpoint CAGR = [(276,000 ÷ 240,000)^1/2 − 1] × 100 ≈ 7.24%.

Do not omit the property's ending value and compare two years of rent with the whole acquisition cost. Conversely, do not count sale proceeds and the same retained property value twice. Actual dated rent receipts require a cash-flow model for an exact timing-based return.

Gain: $36,000 · ROI: 15% · Endpoint CAGR: 7.24%

ROI questions

How do I calculate return on investment?

Choose a consistent cost basis, calculate the total amount returned, subtract the cost once, and divide the resulting gain by cost. Multiply by 100 for a percentage. For cost $2,000 and return $2,500, gain is $500 and ROI is 25%. Record which fees, taxes and operating expenses are included.

What is the difference between the two common ROI formulas?

(Return − cost) ÷ cost × 100 and net gain ÷ cost × 100 are equivalent when net gain already means return minus cost. Do not subtract cost again from an amount that is already profit. The phrase amount returned should mean the total ending amount under the model, not just the gain.

Is a 10% ROI good?

Not without context. Ten percent over three months differs from ten percent over ten years, and a risky, illiquid project differs from a lower-risk alternative. Consider period, probability of loss, costs, inflation, cash needs and available alternatives. There is no universal percentage that makes every investment suitable.

How can I calculate ROI in Excel or Google Sheets?

Place investment cost in A1 and amount returned in B1. Use =(B1-A1)/A1 and format the cell as a percentage. If years are in C1, simple annual ROI is =((B1-A1)/A1)/C1, and CAGR is =(B1/A1)^(1/C1)-1. Format those as percentages too; do not also multiply by 100. For an assumed future growth rate, =FV(rate,years,0,-initial_amount) models annual compounding without extra contributions.

What is the simplest manual ROI workflow?

List all included investment costs.
Determine the ending return on the same basis.
Subtract cost to obtain gain or loss.
Divide by investment cost.
Express the result as a percentage and state the elapsed period.

Then review whether any remaining asset, fee or operating expense has been missed.

What does 500% ROI mean?

A 500% ROI means net gain is five times the included investment, so the total amount returned is six times that investment. On a $1,000 cost, the gain is $5,000 and total returned is $6,000. A final value of $5,000 on that same cost would instead be a 400% ROI.

Which ROI formula should I use when time matters?

Start with total ROI, then report the period. Simple annual ROI divides by years; CAGR gives a compounded endpoint equivalent. If additional contributions or withdrawals occur during the period, neither simple endpoint formula fully captures timing. A dated-cash-flow analysis is more appropriate for that question.

What are the most common ROI calculation errors?

Omitted fees, inconsistent tax treatment, gross revenue used as net proceeds, time periods that do not match, compounding confused with arithmetic averages, and an incomplete cost basis are frequent problems. Keep the original investment separate from profit, and include a remaining asset only once.

What would $20,000 become after ten years at an assumed 7%?

With annual compounding, no withdrawals and no additional contributions, $20,000 × 1.07¹⁰ = $39,343.03. That is a hypothetical growth calculation, not a forecast or guaranteed return. Fees, taxes, inflation and changing returns are excluded; negative years and losses are possible.