How Do You Calculate ROI With Zero Investment?
ROI or return on investment is a metric used by analysts and investors to gauge the return on a particular investment. This return is based on the original cost of the investment and the current market value of the investment. The challenge is determining the value of the investment when no money is exchanged. In this case, the value of the investment is primarily determined by the amount of labor put into it, also known as sweat equity. Estimate the cost of labor. If the investment was given to you and no work was performed, there was nothing invested. Every investment has a cost and if you didn’t pay money for the asset, you can use your time as a proxy. For instance, if you charge $50 per hour as a contractor, this can also be used as an hourly rate for work which results in the acquisition or creation of an asset. Calculate the number of hours spent working on the investment. For instance, if it takes you two hours every day to track down the original copy of your favorite book and
