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What is ROI?

ROI (Definition)

ROI stands for Return on Investment. It is a formula that investors use to look at their investments and see how well a certain investment has done compared to other investments. Put simply, it is a figure that will show you how much money you made or lost on an investment. To work this out, you need to divide the total profit you earned, by the amount you paid for the investment. Times by 100 to get a percentage.

Net Profit / Cost of Investment x 100 = ROI.

For example, say you spent $100 on an investment. The venture generated $300, giving you a profit of $200. $200 / $100 x 100 = 200% ROI.

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