ROI, or Return on Investment, is a financial metric used to evaluate the efficiency of an investment. It measures the gain or loss generated relative to the amount invested. For example, if you invest $100 in a project and earn $120, your ROI would be 20%. This helps individuals and businesses determine whether their investments are worthwhile. Calculating ROI is straightforward: subtract the initial investment from the final value, then divide that number by the initial investment. This simple formula allows investors to compare different opportunities and make informed decisions about where to allocate their resources for the best potential returns.