Average Return on Investment Calculator

Formula

The formula to calculate the average return on investment (AROI) is:

\[ \text{AROI} = \frac{\text{ANEAT}}{\text{II}} \times 100 \]

Where:

$ \text{AROI} $ is the average return on investment (%)
$ \text{ANEAT} $ is the average annual net earnings after taxes ($)
$ \text{II} $ is the initial investment amount ($)

What is an Average Return on Investment?

The average return on investment, also often denoted as the average rate of return on investment, is a term used to describe the average annual percentage return a particular investment yields over its lifetime, or up to a certain point.

Example Calculation

Let's assume the following values:

Average Annual Net Earnings After Taxes ($ \text{ANEAT} $): $5,000
Initial Investment Amount ($ \text{II} $): $50,000

Step 1: Divide the average annual net earnings by the initial investment:

\[ \frac{5,000}{50,000} = 0.1 \]

Step 2: Multiply by 100 to get the percentage:

\[ 0.1 \times 100 = 10 \]

Therefore, the average return on investment is 10%.