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Twenty-five thousand back as 32,500
You spend 25,000 on a project or a piece of equipment. Three years later you have 32,500 back. The dollar gain is 7,500. 7,500 ÷ 25,000 is 30 percent.
Amount invested: 25% lower
Change amount invested to 18,750 while keeping the other example values the same.
Amount invested: 25% higher
Change amount invested to 31,250 while keeping the other example values the same.
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Quick answer
What does the Return on investment calculate?
What is the gain or loss on this outlay, as a percent of the amount invested? This calculator uses amount invested, amount received back, and years held to estimate gain or loss on the amount invested immediately in your browser.
With the values currently entered, the result is 30% — return on investment. It also shows net gain or loss, annualized compound return, amount invested, and amount received back.
How to use the Return on investment
- Replace the example values with your own numbers.
- Review the result and supporting figures as they update automatically.
- Check the formula and assumptions before using the estimate for a decision.
Inputs used
- Amount invested
- Amount received back
- Years held — entered in years
Return on investment formula
ROI = (amount received − amount invested) ÷ amount invested. Annualized return = (received ÷ invested)^(1 ÷ years) − 1.
Assumptions
- Investor.gov defines an annual rate of return as the profit or loss on an investment over a one-year period. The holding-period rate here is the dollar change divided by the amount invested.
- The annualized line is the constant compound rate that would turn the outlay into the amount received, the same relationship Investor.gov uses for compound interest. Fees, tax, inflation, and extra cash in the middle are excluded.
Verify the inputs
Authoritative sources
These sources explain the definitions, factors, or rules behind this tool. Their geographic scope is shown because an official source for one country is not automatically valid somewhere else.
Defines an annual rate of return as the profit or loss on an investment over a one-year period. The holding-period rate is (amount received − amount invested) ÷ amount invested.
Compound interestInvestor.gov — US Securities and Exchange CommissionScope: General method; US sourceA plain-language definition of interest earned on principal and accumulated interest.
Compound annual growth rate (CAGR)Investor.gov — US Securities and Exchange CommissionScope: General investor education; US sourceSEC glossary entry for the constant annual rate that compounds a starting value into an ending value.
Sources do not endorse Calculum. Check the source date, scope, and your own documents before making a financial, tax, insurance, or reporting decision.
Practical guide
Return on investment example and edge cases
Return on investment is the gain or loss on an outlay, written as a percent of the money you put in. Investor.gov calls an annual rate of return the profit or loss over a one-year period. This page starts with the whole holding period, then annualizes it if you type a time span.
Example: Twenty-five thousand back as 32,500
You spend 25,000 on a project or a piece of equipment. Three years later you have 32,500 back. The dollar gain is 7,500. 7,500 ÷ 25,000 is 30 percent.
- Amount invested
- 25,000
- Amount received back
- 32,500
- Years held
- 3 years
Calculated result30%return on investment
The holding-period return is 30 percent. The annualized compound line is 9.1 percent, the constant yearly rate that turns 25,000 into 32,500 in three years. That is the same relationship as the CAGR calculator, with an outlay and a later amount.
Example results use the default display profile. The calculator above follows your selected country and units.
How to read the result
- Read the percent first. Then check the dollar gain. A 30 percent return on 2,000 is a different decision from 30 percent on 200,000.
- The annualized line needs a time span. Leave years at 0 if you only want the holding-period rate.
Edge cases worth checking
You added cash in year two
This formula uses one outlay and one later amount. Extra deposits change the true rate. Split the cash into pieces, or treat the later add as a separate investment.
The 32,500 still has to pay tax
Type the cash you actually keep if you want an after-tax picture. Investor.gov’s annual return is profit or loss, not a tax computation.
What changes the result most
Amount invested
Use a current amount for amount invested. Include fees or recurring costs that belong in the same figure.
Amount received back
Use a current amount for amount received back. Include fees or recurring costs that belong in the same figure.
Years held
Keep years held on the same time basis as the other inputs. Monthly and annual values are easy to mix up.
Try a different scenario
Small changes show whether the answer is stable or sensitive.
Amount invested: 25% lower
18,75073.3%return on investment
Amount invested: 25% higher
31,2504%return on investment
Amount received back: 25% higher
40,62562.5%return on investment
Common mistakes
Check amount invested
Investor.gov defines an annual rate of return as the profit or loss on an investment over a one-year period. The holding-period rate here is the dollar change divided by the amount invested. Make sure this matches the number you enter.
Keep years held consistent
The annualized line is the constant compound rate that would turn the outlay into the amount received, the same relationship Investor.gov uses for compound interest. Fees, tax, inflation, and extra cash in the middle are excluded. Use the same units and time period throughout the calculation.
Do not rely on one return on investment scenario
Run a cautious case and an optimistic case. The range is often more useful than one exact-looking number.
Use this result well
What is the gain or loss on this outlay, as a percent of the amount invested?
It does not replace a quote, contract, accountant, or local employment guidance.