1. What is ROI?

Return on Investment (ROI) is a financial metric used to measure the probability of gaining a return from an investment. It compares the magnitude and timing of gains from investment directly to the amount invested.

2. How Does the Calculator Work?

The calculator uses the ROI formula:

Where:

• \( Gain \) — Total return from investment (INR)
• \( Cost \) — Total cost of investment (INR)

Explanation: The formula calculates what percentage of the original investment you've gained (or lost).

3. Importance of ROI Calculation

Details: ROI helps investors evaluate the efficiency of different investments and compare them. It's crucial for financial decision-making and investment analysis.

4. Using the Calculator

Tips: Enter gain and cost in INR. Cost must be greater than zero. The result shows ROI as a percentage.

5. Frequently Asked Questions (FAQ)

Q1: What is a good ROI percentage?
A: This depends on the investment type and risk. Generally, 7-10% is considered good for stock market investments.

Q2: Can ROI be negative?
A: Yes, negative ROI means the investment resulted in a loss.

Q3: How is ROI different from profit?
A: Profit shows absolute money gained, while ROI shows the percentage return relative to the investment cost.

Q4: Does ROI consider time?
A: Basic ROI doesn't account for time. For time-based analysis, annualized ROI is more appropriate.

Q5: What are limitations of ROI?
A: ROI doesn't consider risk, time value of money, or opportunity costs. It's best used with other metrics.