ExcelBanter - ROI formula

Lucio --

There are several formulas. If you're looking for an answer in terms of an
interest rate, then you probably want to use the IRR or XIRR formulas. If
you're looking for the answer in terms of the value of the income stream in
today's dollars, then you'd want to use the NPV, PV, or XNPV formulas.

Either way, you'll need to know your cost of capital. If you're not sure
and your finance department won't tell you, then you should use the interest
rate you'd have to pay to borrow money. Then, you'll have to set up a range
of money flows. Probably the first money flow is out-going (and therefore
negative) -- your expense to set things up. Then, each period, you're going
to see income (positive flow) or loss (negative). Once you have them set up,
use one of the above formulas.

HTH

"Lucio" wrote:

Good morning!
What's the formula for calculating the return on investment? let's say:

Yr 1 Yr 2
Benefits 1,170 2,292
Costs (1,645) 1,407

Thanks !