# Average Return on Investment Calculator

## About Average Return on Investment Calculator (Formula)

The Average Return on Investment (ROI) Calculator is a tool used to calculate the average percentage return on an investment over a specified period. It aids in evaluating the profitability and performance of investment portfolios. The formula for calculating average ROI involves considering the initial investment amount, final investment value, and the time period.

Formula for calculating average ROI:

Average ROI = [(Final Investment Value – Initial Investment Amount) / Initial Investment Amount] * (1 / Number of Years) * 100

In this formula, “Final Investment Value” represents the total value of the investment at the end of the specified period, “Initial Investment Amount” represents the initial amount invested, and “Number of Years” represents the time period over which the investment was held. Subtracting the initial investment amount from the final investment value, dividing the result by the initial investment amount, and then multiplying it by the reciprocal of the number of years and 100 provides the average ROI as a percentage.

For example, let’s say an initial investment of \$10,000 grows to a final value of \$13,500 over 3 years. The average ROI would be calculated as follows:

Average ROI = [(\$13,500 – \$10,000) / \$10,000] * (1 / 3) * 100 ≈ 15%

This means that the average annual return on the investment over the 3-year period is approximately 15%.

The Average Return on Investment Calculator simplifies the process of evaluating investment performance, aiding investors in understanding the average percentage return on their investment portfolios. By inputting the initial investment amount, final investment value, and the time period, the calculator quickly provides the average ROI, allowing individuals to assess the profitability of their investments and make informed financial decisions.