ROI Calculator: Return on Investment, CAGR & Payback Period
Was that investment actually worth it? Enter what you put in, what you got back, and how long it took — this calculator shows your total return on investment (ROI), the equivalent annualized return (CAGR), and your payback period. Everything runs in your browser; nothing is uploaded. Educational use only — not investment advice.
How to use this calculator
- Initial investment — everything you put in: purchase price plus fees, commissions, and setup costs.
- Final value — what the investment is worth now, or the total cash it returned (sale price plus any income received).
- Holding period — how long you held it, in years. Decimals are fine (e.g. 2.5 for two and a half years).
- Annual cash flow (optional) — if the investment pays you regularly (rent, dividends, business profit), enter the yearly amount to estimate the payback period.
- Results update instantly as you type. For a realistic ROI, make sure fees, maintenance costs, and taxes are reflected in your final value.
The formulas
Worked example: invest $10,000, sell for $16,000 after 5 years. ROI = ($16,000 − $10,000) ÷ $10,000 = 60%. Annualized = (1.6)1/5 − 1 ≈ 9.86% per year. If it also paid $1,200/year in cash flow, the simple payback period is $10,000 ÷ $1,200 ≈ 8.3 years.
ROI vs. annualized ROI: total ROI tells you how much you made overall; CAGR converts it into the steady yearly growth rate that would produce the same result, which is the number to use when comparing investments held for different lengths of time.
Related reading: How to Calculate ROI (With Examples) and ROI vs. ROAS vs. IRR: What's the Difference?
Frequently asked questions
How do you calculate ROI?
ROI = (Final value − Initial investment) ÷ Initial investment, expressed as a percentage. For example, $10,000 growing to $16,000 is ($16,000 − $10,000) ÷ $10,000 = 60% ROI.
What is the difference between ROI and annualized ROI (CAGR)?
ROI measures total return over the whole holding period; annualized ROI (also called CAGR) spreads that return into an equivalent yearly growth rate: (Final ÷ Initial)^(1 ÷ years) − 1. A 60% total return over 5 years equals about 9.86% per year.
What is a good ROI?
It depends on the risk and time involved. Long-term stock market returns have averaged roughly 7–10% per year before inflation, so a business or investment project is often compared against that benchmark — but past performance never predicts future results.
What is the payback period?
The payback period is how long it takes for an investment's cash flow to cover its initial cost: Initial investment ÷ Annual cash flow. It is a simple estimate that ignores the time value of money and any cash flows after payback.
Does ROI include fees and taxes?
Only if you include them in your numbers. For a realistic ROI, subtract purchase fees, commissions, maintenance costs, and taxes from the final value before calculating.