[tfoster14uk]

How do you calulate the return on an investment. For example when some says they'll make 35% return per annum, how do they calculate that. Also how do investers decide what percetnage of equity they want in exchange for their money. Can please tell me in simple terms, nothing that is in an algerbraic format

[LBP]

Return on Investment (ROI), is calculated by simply dividing your your gain or (loss) by your beginning investment balance on a particular starting date. Annum is a Latin noun meaning year, per annum means "yearly".For instance, if Bob invested $5,000 (in a stock; bond; etc.) on January 1, 2006, and ended up with $5600 dollars on December 31, 2006, Bob has a gain of $600 for the year, therefore, Bob's ROI is 12% per annum.You divide Bob's gain of $600, by Bob's initial investment of $5000, to calculate his return of 12% To do this for 2007, you would use $5600 as Bob's beginning investment amount, and divide the gain or (loss) by this $5600.This can also be done on a daily, weekly, or monthly basis as long as you have an amount for the start date (beginning amount) and a gain or (loss) amount.