# Return On Investment Calculation Example

**Return On Investment Calculation Example**. An organisation can use return on investment formula to evaluate the potential profits gained from an investment, while an investor can apply this formula to calculate return on stock. It is most commonly measured as net income divided by the original capital cost of the investment.

Usually, you do investments with the motto of earning a profit on it. The return on investment formula is a simple mathematical expression to calculate the roi of an investment. Example of the roi formula calculation.

### Usually, We Perform The Calculation Roi With Figures For A Full Year.

Roi = net return on investment / cost of investment x 100%. Since most methods use real estate as a passive income vehicle, we will look at an example around investing in real estate. Now, after a particular time period, one side gives $1200 in return whereas, the other one gives the output of $1400.

### Fortunately, He Gets Two Choices And He Chooses To Invest $1000 On Each Side.

Investors use it to define in which financial project (s) their money will be best profitable. The anticipated cost of the project is. One effective way to calculate roi is by using this formula:

### The Return On Investment (Roi) Is Calculated As The Average Annual Profit As A Percentage Of The Initial Investment.

All three alternatives require an initial investment in year 0 (negative cash flow) and come with a single payment at maturity that consists of the repayment and the return. Two years ago joshua invested $65,000 into a digital printing press and has generated $95,000 in net revenues from the equipment. However, there is a significant difference.

### Usually, You Do Investments With The Motto Of Earning A Profit On It.

Note that to calculate the roi we need the total profit, and the number of years to calculate the average annual profit. The return on investment formula is a simple mathematical expression to calculate the roi of an investment. For example, the return on assets (roa) calculation shows a company’s return (profit) for every $1 of assets it owns.

### But What If These Scenario Forecasts Didn’t Materialize?

Return on investment example #1. Abc company is considering investing in the new project in which the expected net profit of investment will be $200,000 per annual for five years. Identify the net return on investment