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Investing requires a good understanding of ROI (return on investment). This is the formula that calculates how much profit you receive from an asset after deducting the initial purchase price. It is used to compare the profitability of different investments and can be used to identify underperforming investments. It can also be used to determine the most effective way to invest funds ihokibet.




The most common method of calculating ROI is the net present value (NPV) method, which uses the discounted cash flow technique to calculate an investment’s return on investment. This method is particularly useful for valuing projects with long lead times and uncertain completion dates. It is also a good choice for comparing the potential profitability of investments with different payback periods.

Another commonly used measure of an investment’s performance is annualized ROI, which takes into account the compounding effect of returns over time. It can be calculated by dividing an average ROI by the holding period. For example, a stock with an ROI of 50% over five years would have an annualized ROI of 10%.

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