How this calculator works
- Step 1Count the initial outlay₹1,01,000.00Investment plus separately entered entry costs.
- Step 2Count net receipts₹1,29,000.00Final value plus income, less exit costs.
- Step 3Divide profit by outlay27.72%This is total return across the whole period.
ROI means return on investment. Here it compares the money gained or lost with the initial acquisition outlay, including entry costs. Separate income increases receipts; exit costs reduce them. The convention is stated so the denominator is clear.
A positive ROI means net receipts exceed that outlay. A negative ROI means they fall short. This is arithmetic on entered amounts, not a valuation, recommendation or estimate of future performance.
Worked example: costs and income included
- Initial outlay
C = investment + entry costs- Net receipts
N = final value + cash income − exit costs- Total ROI
ROI = (N − C) ÷ C × 100
- Investment before entry costs₹1,00,000.00
- Add entry costs₹1,000.00
- Total initial outlay₹1,01,000.00
- Final value₹1,25,000.00
- Separate cash income₹5,000.00
- Exit costs to subtract₹1,000.00
- Net receipts₹1,29,000.00
- Receipts less outlay₹28,000.00
- Profit divided by initial outlay27.72%
Keep the ledger consistent. If your final value already includes reinvested distributions, do not enter those same distributions as separate cash income. If a sale value is already net of charges, do not subtract them again as exit costs.
Total ROI is not annualised ROI
- Whole-period ROI27.72%The complete change relative to initial outlay.
- Equivalent annualised ROI13.01%The constant compound yearly rate connecting outlay and net receipts.
- Ignoring the entered costs30%A different ledger produces a different return.
The annualised calculation solves the compound-growth equation using initial outlay and net receipts as two endpoints. It is not total ROI divided by years. It describes an equivalent rate, not the returns actually earned in each intervening year.
- Annualisation
annualised ROI = [(N ÷ C)^(1 ÷ years) − 1] × 100
- Initial endpoint₹1,01,000.00
- Final endpoint₹1,29,000.00
- Holding period in years2
- Equivalent annualised ROI13.01%
This simplified rate groups all cash income at the end. When income arrived earlier, its timing and reinvestment can matter. Use the XIRR calculator for dated irregular cash flows rather than interpreting this figure as a money-weighted return.
Periods below one year are allowed in decimal years. Annualising such a period extrapolates it; it does not mean you observed that annual outcome. The result explicitly labels this limitation when the holding period is short.
What break-even means here
The break-even sale amount covers the initial outlay and exit costs after counting separate income.
The default ledger needs a final sale amount of ₹97,000.00 for zero net profit. The formula is initial outlay plus exit costs minus cash income, floored at zero because a sale amount cannot be negative here.
If entered cash income already covers the initial outlay and exit charges, no positive sale amount is required to avoid a total loss. That is a ledger result, not a market quote or a claim that the original capital is still intact.
Losses and undefined annualisation
- Total loss in the example-19%The endpoint value is below the initial outlay.
- Net loss−₹19.00Loss is expressed relative to the entered starting amount.
Zero net receipts give a total and equivalent annualised return of minus one hundred percent. Costs can even make net receipts negative. Total ROI then falls below minus one hundred percent, but the geometric annualised rate is undefined.
The calculator preserves that total ROI and explains why annualisation is unavailable. It also reports an unavailable rate if extreme amounts over a very short period exceed the numeric range. Neither case is silently replaced with zero.
Assumptions and common mistakes
Mistake: Deduct a cost from final value and enter it again as an exit cost.
Instead: Enter each cash amount once, on a consistent net or gross basis.
Mistake: Add income already included in the ending investment value.
Instead: Use Cash income only for receipts not already in Final value.
Mistake: Treat the annualised endpoint rate as XIRR.
Instead: Use dated cash flows when timing, reinvestment or intermediate payments matter.
Mistake: Read a positive historical ROI as a promise.
Instead: Keep historical calculation separate from future assumptions and investment decisions.
This tool does not calculate tax rules, inflation, leverage, recurring deposits or currency conversion. Costs are entered rupee amounts, not a broker fee schedule. All amounts should use the same currency and a consistent before- or after-tax basis.
Sources and independent checks
A cash ledger checks total ROI; compound substitution checks the annualised rate.
The percentage equation follows OpenStax’s treatment of change relative to a base. Annualisation rearranges its compound-value equation. Tests check rational ledger examples, loss cases, break-even reconstruction, scale invariance and explicit annualisation failures. The source links and review details follow.
Related return tools
ROI gives the total return. Yearly rates and dated cash flows need other measures.
For the yearly growth rate between two values, use the CAGR calculator. When money went in or out on several dates, the XIRR calculator weighs each one, and the payback period calculator shows how soon the cost comes back.
Read how we test our calculators, or browse more money calculators.