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ROI & CAGR Calculator

Calculate the absolute Return on Investment (ROI), net profit, and Compound Annual Growth Rate (CAGR) for any investment asset or business project.

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$
years

Ongoing Cash Flows

$
$
Net Profit
$42,500.00
Absolute ROI
80.95%
Annualized ROI
12.59%
Pure CAGR
11.20%
An investment of $50,000 grows to a final value of $85,000 over 5 years. Factoring in $2,000.00/year in cash income and $500.00/year in costs, your net profit is $42,500.00. This represents an absolute return of 80.95% (an annualized rate of return of 12.59%). The compound annual growth rate (CAGR) of the asset value itself is 11.20%.
Annualized Return12.59%

Performance Projections

Yearly breakdown of asset values, cash flows, net worth, and cumulative yields
YearAsset ValueCumulative IncomeCumulative ExpensesTotal OutlayTotal returnsCumulative ROI
1$55,598.08$2,000.00$500.00$50,500.00$57,598.0814.06%
2$61,822.93$4,000.00$1,000.00$51,000.00$65,822.9329.06%
3$68,744.72$6,000.00$1,500.00$51,500.00$74,744.7245.14%
4$76,441.49$8,000.00$2,000.00$52,000.00$84,441.4962.39%
5$85,000.00$10,000.00$2,500.00$52,500.00$95,000.0080.95%

Understanding ROI vs. CAGR Formulas

The calculator computes three key investment metrics:

  • Net Profit: Total returns (Asset final value + cumulative annual income) minus Total outlays (Initial investment + cumulative annual expenses).
  • Absolute ROI: Net Profit divided by Total Outlays, expressed as a percentage. It represents absolute gains regardless of time.
  • CAGR (Compound Annual Growth Rate): The annual growth rate required to turn your initial purchase price into its final value over the holding period: CAGR = (Final Value ÷ Initial Investment)^(1 ÷ Years) - 1.

Frequently asked questions

What is the difference between ROI and CAGR?

ROI (Return on Investment) measures the absolute percentage gain or loss on an investment relative to its cost, regardless of how long it was held. CAGR (Compound Annual Growth Rate) measures the annualized rate of return, representing the steady geometric rate at which the investment grew each year.

Why is annualized ROI important?

Annualized ROI is crucial because it allows you to compare investments held for different lengths of time. A 50% absolute ROI over 10 years (4.1% annualized) is less efficient than a 20% absolute ROI over 1 year (20% annualized).

How do annual expenses and income affect ROI?

Ongoing income (like dividends or rental income) increases your total returns, while ongoing expenses (like property taxes or management fees) increase your total outlays. Both are factored into your net profit to calculate the true net ROI.