Currency: USD
Enter all amounts in USD. Changing currency keeps numbers unchanged; no exchange rate is applied.
- Return on investment
- 42.86%
- Net profit
- $4,500.00
- Annualized return
- 1.8%
How it works
Annualizing short gains magnifies the assumption
A 20% gain over half a year annualizes to 44%, not 40%, because the growth factor is squared. That assumes the same pace could repeat; it does not mean you actually earned 44% on the original transaction.
Putting return on investment in context
ROI compares the gain or loss with the amount invested, but a percentage alone does not describe how long the investment lasted. Use the exact-date annualized mode when duration matters. If money enters or leaves at several dates, the dated cash-flow mode is more informative than treating everything as one initial purchase. Keep costs consistent across investments being compared.
Return on investment: formula and assumptions
ROI = (proceeds−total cost)/total cost. Annualized return = (proceeds/total cost)^(1/years)−1.
This simple annualization assumes one initial investment and one final distribution.
Exact-date annualized ROI: formula and assumptions
ROI = proceeds/cost − 1; annualized return = (proceeds/cost)^(365/days) − 1.
Uses exact elapsed calendar days, with a 365-day annualization convention. For intermediate deposits or withdrawals use dated money-weighted return.
Dated money-weighted return: formula and assumptions
Solve Σ cash flow / (1+r)^(elapsed days/365) = 0.
Payments by the investor are negative; receipts are positive. Actual dates account for unequal intervals. Multiple detected annual-return solutions are reported rather than choosing an arbitrary root.
Worked example
Reference example currency: USD. These fixed examples do not change with your calculator preferences.
Using the Return on investment example:
- Initial investment ($)
- 10000
- Final proceeds ($)
- 15000
- Additional costs ($)
- 500
- Years
- 20
ROI = (proceeds−total cost)/total cost. Annualized return = (proceeds/total cost)^(1/years)−1.
Example result
Return on investment: 42.86%
Net profit: $4,500.00
Annualized return: 1.8%
These are illustrative inputs. Change the values to explore a different scenario.
Formula references
References explain the underlying methods; they do not imply endorsement or individual professional review of Finflo.
Common questions
How does exact-date annualized ROI handle time?
It uses the actual elapsed calendar days and a 365-day annualization convention between the initial cost and final proceeds.
Which mode fits several deposits and withdrawals?
Use dated money-weighted return with signed cash flows. Simple ROI annualization assumes one initial investment and one final receipt.
Prepared by Finflo. See our methodology and editorial policy. Read the relevant professional-advice limitations.