Method of Calculating Return on Investment

There are numerous methods for the calculation of ROI. The most common is the “Net income divided by total cost of investment” formula. It is:
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ROI=Net income/Cost of investmentx100

For example, let’s take an individual who has invested $80 in a business venture and paid an additional $20 to analyze the venture. So, the investor's total cost is $100. If that venture generated $500 in revenue but had $300 in personnel and regulatory costs, the net profit would be $200.
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ROI=(200/100)x100
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By using the formula, an ROI is calculated by dividing $200 by $100 for a quotient or answer of 2. This answer is then converted to a percentage form by multiplying it by 100. Hence, this particular investment's ROI is 2 multiplied by 100, or 200%.