The basic calculation
ROI compares net return with the amount invested. A common formula is (gain minus investment cost) divided by investment cost.
Compare like with like
Time periods and included costs should be consistent when comparing two investments.
Do not use ROI alone
Cash flow, risk, time to payback and opportunity cost can matter even when headline ROI looks attractive.
ProfitMaths guides provide general educational information, not personalised accounting, tax, legal or financial advice.