ROI Calculations
Hi This may be a dumb question and show I have no math skills, but I need to know how to calculate ROI percentages. For instance I have an investor who is putting up 23K and will be getting 27K back within 60days. Is there a formula for claculating the percentage he is getting. I now how to do it annualy but not like this. Any help?
Joe the non math whiz!
[addsig]
Your investor is getting a $4K profit on his $23K investment in only 60 days. ROI = (profit) / (investment) x 100% = 17.39%
Annual Percentage Return = ROI x (360 days) / (60 days) x 100% = 104.35% It would be equally acceptable to use a 365 day year instead.
So let me get this straight.
If my investment is 9K and my profit is 12K.
My ROI is 133%
(12/9)*100
MY annual ROI is 799.98%
(133.33*360)/60
Is this right?
:-D
InvestorNC,
Not exactly. Your calculations seem correct, but the terminology needs clarification. ROI is the percentage return on your investment capital. The actual return in your example (invest $9K, get $21K back for a $12K profit) is always 133% whether earned in 60 days or 360 days or 24 months.
The annual percentage return is a measure of how quickly your invested capital generated that return. If it took two years to get your 133% ROI, the APR would be about 67%.
Does this answer your question?
Dave in the above example, is the return based on if I kept doing this every 60 days? using the same money as originally invested?
I look at cash flow to seem how the project matures.
Look at the spreadsheet macro internal rate of return (IRR)
It allows you to say you didn't have 12K out standing for the whole project, but 6,3,0,0,3
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