Free ROI calculator 2026. Calculate return on investment with full formula, annualized ROI, NPV, and IRR. Worked examples for marketing campaigns, real estate, and equipment purchases.
Enter your Initial Investment amount — the original capital you put into the investment at the start.
Enter the Final Value — the total amount the investment is worth now, including your original capital and all gains.
Optionally, enter any Additional Contributions you made during the investment period (beyond the initial investment).
Specify the Investment Duration in years to calculate the annualized return rate.
Click "Calculate ROI" to see your total profit, overall ROI percentage, annualized return, and a visual investment health assessment.
Review the worked examples below to see how ROI applies to stocks, marketing campaigns, real estate, equipment purchases, and business acquisitions.
Bookmark or share your calculation using the Share button — the URL encodes your inputs so you can revisit the exact scenario later.
ROI measures the profitability of an investment as a percentage of the total cost. The annualized ROI formula accounts for the time period, allowing you to compare investments of different durations on equal footing: Annualized ROI = ((Final Value / Cost)^(1/n) - 1) × 100, where n is the number of years. Annualized ROI is also called Compound Annual Growth Rate (CAGR). The key limitation of basic ROI is that it ignores time — a 50% return over 1 year is very different from 50% over 10 years. Always use annualized ROI when comparing investments held for different periods.
You invested $10,000 in stocks. After 2 years, the portfolio is worth $13,000. Your profit is $3,000, giving a total ROI of 30%. The annualized ROI is 14.02%, meaning your investment grew at an equivalent rate of about 14% per year on a compound basis. This compares favorably to the S&P 500 historical average of ~10% annualized.
A marketing campaign cost $5,000 in labor plus $2,000 in ad spend, totaling $7,000 invested. It generated $12,000 in revenue. The profit is $5,000, yielding an ROI of 71.43% ($5,000 profit on $7,000 invested). Marketing ROI is often expressed as a ratio: $5,000 / $7,000 = 0.71x return, or in marketing-speak, "5:7 ROAS" (return on ad spend).
You put a $50,000 down payment on a rental property. Over 5 years, you collect $30,000 in net rental income and sell the property for $300,000 (your purchase price was $250,000, so $50,000 appreciation). Total return = $30,000 + $50,000 = $80,000. Total ROI = $80,000 / $50,000 × 100 = 160% over 5 years. Annualized ROI = ((130,000 / 50,000)^(1/5) - 1) × 100 = 21% per year.
A manufacturer buys a $20,000 machine that saves $6,000 in labor costs per year. The payback period is $20,000 / $6,000 = 3.33 years. After 5 years, the machine has saved $30,000 in labor costs. ROI = ($30,000 - $20,000) / $20,000 × 100 = 50% over 5 years. Annualized ROI = ((30,000 / 20,000)^(1/5) - 1) × 100 = 8.45% per year.
You buy a small business for $500,000. It generates $150,000 in annual owner cash flow. After 3 years, you have collected $450,000 in profits and sell the business for $600,000. Total return = $450,000 + $600,000 - $500,000 = $550,000. Total ROI = $550,000 / $500,000 × 100 = 110% over 3 years. Annualized ROI = ((1,050,000 / 500,000)^(1/3) - 1) × 100 = 28% per year.
You spend $40,000 on an MBA program. Your salary increases by $20,000/year after graduation. After 10 years, the cumulative salary increase = $200,000. ROI = ($200,000 - $40,000) / $40,000 × 100 = 400% over 10 years. Annualized ROI = ((240,000 / 40,000)^(1/10) - 1) × 100 = 19.6% per year.
Find answers to the most common questions about roi calculator.
A "good" ROI depends on the investment type and risk level. For the stock market, the S&P 500 historically returns about 10% annually before inflation, so an annualized ROI above 10% is generally considered strong. Real estate investments typically target 8-12% annual returns. For startup investments or venture capital, investors often look for 25%+ annual returns to compensate for the higher risk. For marketing campaigns, a 5:1 ratio (500% ROI) is the typical target.
Profit is an absolute dollar amount — the difference between what you invested and what you received. ROI expresses that profit as a percentage of the total cost, making it easy to compare investments of different sizes. For example, a $1,000 profit on a $2,000 investment (50% ROI) is proportionally much better than a $1,000 profit on a $50,000 investment (2% ROI), even though the dollar profit is the same.
Annualized ROI converts your total return into an equivalent yearly rate, allowing you to compare investments held for different periods. For instance, a 30% return over 3 years is equivalent to roughly 9.14% per year. The formula uses compound growth: Annualized ROI = ((Final Value / Cost)^(1/years) - 1) × 100. This is sometimes called Compound Annual Growth Rate (CAGR) and gives a more accurate picture of long-term investment performance.
Basic ROI does not account for time — a 50% return over 1 year and a 50% return over 10 years both show the same ROI. That is why annualized ROI is important. Annualized ROI normalizes returns to a per-year basis using compound growth calculations, enabling apples-to-apples comparisons across investments with different holding periods. For investments with cash flows over time, use Net Present Value (NPV) and Internal Rate of Return (IRR) for a more accurate picture.
ROI is a simple percentage: (gain / cost) × 100. IRR (Internal Rate of Return) is the discount rate at which the Net Present Value of all cash flows equals zero. The key difference: IRR accounts for the timing of cash flows, while simple ROI does not. Use ROI for simple "buy once, sell once" investments; use IRR (and NPV) for cash-flowing investments like real estate, equipment, or marketing campaigns.
Taxes can significantly reduce your actual ROI. Investment gains may be subject to: (1) Short-term capital gains tax (ordinary income rate, up to 37%) for assets held under 1 year. (2) Long-term capital gains tax (0%, 15%, or 20% depending on income) for assets held over 1 year. (3) Net investment income tax (3.8%) for high earners. (4) State capital gains tax (varies by state, 0-13.3%). For real estate, depreciation can shelter rental income from tax. For business equipment, Section 179 deduction lets you expense up to $1.16M of equipment purchases in year 1.
Marketing ROI benchmarks vary widely by channel and industry. Typical targets: Email marketing 3,000-4,000% ROI (the highest, due to low cost per email), SEO 200-500% (long-term play, 6-12 months to materialize), paid search 100-300%, social media ads 50-200%, content marketing 200-400% (long-term). For e-commerce, the typical benchmark is "ROAS" (Return on Ad Spend) of 4:1 — meaning $4 in revenue per $1 in ad spend, equivalent to 300% ROI.
ROI (Return on Investment) = (Revenue - Cost) / Cost × 100. ROAS (Return on Ad Spend) = Revenue / Ad Spend. The difference: ROI subtracts the cost from revenue before dividing; ROAS does not. A 4:1 ROAS means $4 in revenue per $1 in ad spend — but if the product itself costs $2 to make, your profit is $4 - $2 - $1 = $1, and ROI is $1 / $3 = 33%. ROAS overstates profitability because it ignores product cost. Always use ROI for true profitability analysis; use ROAS only for top-of-funnel ad efficiency comparison.
For a flip: ROI = (Sale Price - Purchase Price - Renovation Costs - Holding Costs - Selling Costs) / (Purchase Price + Renovation Costs) × 100. For a rental: ROI = (Annual Rental Income - Operating Expenses - Mortgage Payment) / (Down Payment + Closing Costs) × 100. This is also called "cash-on-cash return." A typical target is 8-12% cash-on-cash return for rental properties. Note: ROI understates total return because it ignores appreciation, principal paydown, and tax benefits (depreciation).
Payback period measures how long it takes to recoup your initial investment: Payback = Initial Cost / Annual Cash Flow. For example, a $20,000 machine saving $5,000/year has a 4-year payback period. ROI measures the profitability percentage over a period: the same machine over 10 years generates ($50,000 - $20,000) / $20,000 = 150% ROI. Payback is a risk metric (how long is my capital at risk?); ROI is a profitability metric (how much did I earn?). Most capital budgeting decisions use both.
Calculations and computational models on QuickBizCalc are verified against published regulatory standards and statutory tax tables:
Publication 15-T (Federal Income Tax Withholding Methods) & Publication 15 (Employer's Tax Guide).
Fair Labor Standards Act (FLSA 29 U.S.C. § 207) regulations on overtime hours, recordkeeping, and minimum wage.
OASDI taxable maximum wage base limits and statutory FICA tax rates (6.2% Social Security + 1.45% Medicare).
Formulas and worked examples are checked against the sources above before publishing. For advice on your own situation, consult a licensed tax professional or accountant.
