ROI Calculator — Return, Annualized ROI & Payback
Calculate total and annualized ROI, model recurring project cash flow, find simple and discounted payback, compare scenarios, and review NPV.
Return on a completed investment
Include fees in total cost and cash income in total proceeds. Annualized ROI assumes the proceeds are valued at the end of the holding period.
Recurring cash-flow project
Model regular inflows and operating costs, then compare simple and discounted payback. Growth is applied equally to recurring inflows and costs.
Compare two investment scenarios
Annualized ROI is the primary comparison so projects with different holding periods are evaluated on the same time scale.
Scenario A
Scenario B
Cost vs. proceeds
Calculation breakdown
Cash-flow projection
| Period | Net cash flow | Cumulative | Discounted cumulative |
|---|
ROI calculator formula
Return on investment equals net gain divided by total investment cost, multiplied by 100. Total cost should include fees and other entered costs; total proceeds can include ending value and cash income. A positive result is a gain and a negative result is a loss.
Annualized ROI calculator
Annualized ROI converts a multi-year result into a compound yearly rate: (total proceeds ÷ total cost)1 ÷ years − 1. It is more useful than dividing total ROI by years, but this quick model assumes the entered proceeds are valued at the end of the holding period.
Payback period and break-even
Simple payback is the point when cumulative undiscounted cash flow recovers upfront investment and costs. Discounted payback applies the entered discount rate first, recognizing that future cash is not equivalent to cash today. Both are screening metrics, not a complete investment decision.
Cash-flow project assumptions
The project mode models regular monthly, quarterly, or yearly cash flows. The same annual growth rate is applied to inflows and recurring costs, terminal value is added in the final period, and NPV discounts every period back to the start.
Compare investments fairly
Two projects can have the same total ROI but very different holding periods. Compare mode highlights annualized ROI, while still showing total ROI, net gain, cost, and proceeds. Risk, taxes, liquidity, and timing of intermediate cash flows remain separate considerations.
Negative ROI and unrecovered projects
Negative ROI means entered proceeds are below total cost. “Not reached” payback means cumulative modeled cash flow does not recover the upfront cost within the selected horizon. Neither outcome is hidden or replaced with zero.
ROI and payback formulas
| Metric | Formula |
|---|---|
| Net gain | Total proceeds − total cost |
| ROI | Net gain ÷ total cost × 100 |
| Annualized ROI | (Total proceeds ÷ total cost)1 ÷ years − 1 |
| Simple payback | First period cumulative cash flow recovers upfront cost |
| NPV | −upfront cost + sum of discounted future cash flows |
Frequently asked questions
Should revenue or profit be used for marketing ROI?
Use the economic return attributable to the campaign, not gross revenue by itself. Subtract relevant delivery or product costs before treating an amount as the returned value.
Why can annualized ROI differ from total ROI?
Total ROI covers the whole holding period. Annualized ROI compounds the cost-to-proceeds multiple over one year so durations can be compared.
Does simple payback include the time value of money?
No. Discounted payback applies the entered discount rate. Even discounted payback ignores cash flows after recovery, so also review NPV and the full projection.
Method and sources
FINRA’s investment return guidance explains including costs, income, and compound annualization. The U.S. Department of Energy life-cycle cost guide distinguishes simple and discounted payback and describes payback as a screening tool. Irregular dated cash flows require a method such as Microsoft’s documented XIRR; this workspace models regular intervals instead. Results are estimates, not investment, accounting, or tax advice.
