CI = cost of investment

GI = gain from investment

n = number of years

Return on Investment (ROI) is a performance measure, used to evaluate the efficiency of an investment or compare the efficiency of a number of different investments. ROI measures the amount of return on an investment, relative to the investment’s cost. To calculate ROI, the benefit (or return) of an investment is divided by the cost of the investment. The result is expressed as a percentage or a ratio.

More information here.

More information here.

For example, we invested 10,000 Euros 5 years ago. The value of the investment today is 30,000 Euros.

We substitute the values into the formula mentioned above.

ROI = (30,000 - 10,000) / 5 = 0.4.

Therefore, the ROI value is 40%, or the annual return is 40%.

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