How to Calculate the ROI on a Project

by Carter McBride; Updated September 26, 2017
Calculating ROI helps companies determine the success a project has at generating revenue.

When a business finishes a project, they want to know how successful it was in generating revenue. One way to determine a project's success is to perform a return on investment analysis. A return on investment (ROI) analysis shows how much revenue a project generated, compared to how much the project cost. Companies want to have a higher ROI on projects, because then the project generated more revenue relative to its cost to implement.

Step 1

Determine the cost of the project and the revenues from the project for the period management wishes to analyze. For example, a firm wants to start a new widget plant. The cost of the plant is $100,000. After 2 years, the firm estimates the project generated $150,000 in revenues.

Step 2

Subtract the cost of the project from the gain from the project. In our example, $150,000 minus $100,000 equals $50,000.

Step 3

Divide the number calculated in Step 2 by the cost of the project to determine ROI. In our example, $50,000 divided by $100,000 equals a ROI of 0.5.

About the Author

Carter McBride started writing in 2007 with CMBA's IP section. He has written for Bureau of National Affairs, Inc and various websites. He received a CALI Award for The Actual Impact of MasterCard's Initial Public Offering in 2008. McBride is an attorney with a Juris Doctor from Case Western Reserve University and a Master of Science in accounting from the University of Connecticut.

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