Return on Investment

Gain or loss, which is generated on an investment relative to invested amount of money, can be measured by return on investment (ROI) [1]. So, ROI provides companies or people to measure their gain or loss, return on investment and annualized return on investment.

Let

= Income,

= Initial Investment,

= Number of Years,

= Gain or Loss,

= Return on Investment,

= Annualized Return on Investment.

We have

**Example 1**

*Input*

Investment = 2000

Income = 1500

Years = 3.5

*Output*

Gain or Loss = -500

ROI = -25%

Annualized ROI = -7.143%

**Example 2**

*Input*

Investment = 1000

Income = 1200

Years = 2

*Output*

Gain or Loss = 200

ROI = 20%

Annualized ROI = 10%

1. Return on investment (ROI) (n.d.). Retrieved June 13, 2017, from http://www.investinganswers.com/ financial-dictionary/technical-analysis/ return-investment-roi-1100