A calculation used to determine the expected return of a project in comparison to the cost of the investment. This is normally expressed as a percentage, typically either APR or APY.
This can be done before investing to determine if it is a worthwhile venture to get involved with.
ROI = [ Income - cost/cost ] * 100
It is a concept that is applicable to both fixed income instruments as well as those of the speculative nature. It can also apply to real estate investments.