Return on investment (ROI) is a commonly used measure of performance and investment return. It is calculated by dividing the original value of an investment by the profit (or loss) made on an investment over time. If you know the ROI, which is a percentage, you can use this equation to also calculate the dollar profit value. The challenge is determining the original value if unknown.
Determine the return. This is a given. Let's say the return is 10 percent; that is, the investment or business has a return of 10 percent.
Determine the original cost of the investment (initial investment value). This may be difficult depending on the situation and may need to be estimated. In general, however, this is the amount in which you paid for the asset or to buy into the investment.
Calculate the profit made on the investment. Multiply the return by the original cost of the investment (initial investment value). For instance, if the initial investment value (price you paid for the investment) is $100, then the profit is calculated by multiplying 10 percent by $100. The calculation is: 10% x $100 = $10.
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