FDI ROI Calculator (Foreign Direct Investment Return)

Model the return on a foreign direct investment (FDI) project or portfolio. Enter your initial outlay, follow‑on investments, annual cash flows and exit value to get simple ROI, annualized ROI, NPV and IRR.

Tip: Use this for greenfield projects, cross‑border M&A, or expansion of an existing foreign subsidiary. You can add negative cash flows for losses or additional capital injections.

FDI Project Inputs

Currency

Label only (does not convert). Use the project reporting currency.

Discount rate / required return (% per year)

Include country and currency risk premiums.

Initial FDI investment (Year 0)

Enter as a positive number; the calculator treats it as an outflow.

Follow‑on investments (total, Years 1+)

Optional additional capital injections over the life of the project.

Number of projection years

You can model up to 40 years. Exit value is assumed at the end of the last year.

Annual cash flows & exit value

Enter net cash flow to the investor for each year (after local taxes, operating costs, etc.). Use negative values for losses or additional capital injections.

Year	Net cash flow

Exit value at end of final year (optional)

Estimated sale value of the foreign subsidiary, terminal value, or liquidation proceeds.

Results

Total invested capital

–

Initial investment + follow‑on investments.

Total cash returned

–

Sum of net cash flows + exit value.

Simple ROI

–

ROI = (Total returned − Total invested) ÷ Total invested.

Annualized ROI (CAGR)

–

Assuming investment held from Year 0 to final year.

Net Present Value (NPV)

–

Discounted at your required return.

Internal Rate of Return (IRR)

–

Annual rate that makes NPV = 0 (if solvable).

Cash flow timeline (including investments)

Year	Net cash flow	Discounted value

How this FDI ROI calculator works

Foreign direct investment (FDI) projects often involve large upfront capital, follow‑on investments, and a mix of operating cash flows and exit proceeds. This tool lets you model those cash flows and compute:

Simple ROI – total profit relative to total capital invested.
Annualized ROI (CAGR) – average yearly growth rate over the investment horizon.
Net Present Value (NPV) – value created after discounting cash flows at your required return.
Internal Rate of Return (IRR) – the discount rate that makes NPV equal to zero.

1. Cash flow structure

The calculator builds a yearly cash flow timeline:

Year 0: Initial FDI investment (treated as a negative cash flow).
Years 1 to N: Net cash flows from operations (can be positive or negative).
Exit value: Added to the final year as additional inflow.

Follow‑on investments are included in the total invested capital used for ROI, but for simplicity they are not individually timed in the IRR/NPV stream. If you need precise timing of each follow‑on tranche, you can enter them as negative cash flows in the relevant years instead of using the follow‑on field.

2. Formulas used

Total invested capital

\[ \text{Invested} = I_0 + I_{\text{follow-on}} \]

where \(I_0\) is the initial investment and \(I_{\text{follow-on}}\) is the sum of later capital injections.

Total cash returned

\[ \text{Returned} = \sum_{t=1}^{N} CF_t + \text{Exit} \]

where \(CF_t\) is the net cash flow in year \(t\) and Exit is the terminal value at the end of year \(N\).

Simple ROI

\[ \text{ROI} = \frac{\text{Returned} - \text{Invested}}{\text{Invested}} \]

Annualized ROI (CAGR)

\[ \text{CAGR} = \left(\frac{\text{Returned}}{\text{Invested}}\right)^{\frac{1}{N}} - 1 \]

where \(N\) is the number of years between the initial investment and the final year.

Net Present Value (NPV)

\[ \text{NPV} = \sum_{t=0}^{N} \frac{CF_t}{(1+r)^t} \]

where \(r\) is your discount rate and \(CF_0 = -I_0\).

Internal Rate of Return (IRR)

IRR is the rate \(r^*\) such that:

\[ 0 = \sum_{t=0}^{N} \frac{CF_t}{(1+r^*)^t} \]

The calculator solves this numerically using an iterative method.

3. Choosing a discount rate for FDI

For cross‑border projects, the discount rate should reflect your home‑country cost of capital plus premiums for:

Country risk (political stability, rule of law, expropriation risk).
Currency risk (expected depreciation, capital controls).
Sector and project‑specific risk (competition, technology, regulatory risk).

Many investors benchmark against historical FDI rates of return published by organizations such as UNCTAD, OECD, the World Bank or IMF, and then adjust for their own risk appetite.

4. Interpreting the outputs

ROI > 0 means the project generated a profit; ROI < 0 indicates a loss.
NPV > 0 means the project creates value above your required return.
IRR > discount rate suggests the project is attractive on a risk‑adjusted basis.
Compare multiple FDI scenarios (e.g., different countries or tax regimes) using the same discount rate for consistency.

5. Common FDI ROI pitfalls

Ignoring tax treaties and withholding taxes that affect repatriated profits.
Underestimating ramp‑up time for greenfield projects.
Not stress‑testing FX rates and inflation in the host country.
Overlooking non‑financial benefits such as market access or supply‑chain resilience.

FDI ROI – frequently asked questions

How do you calculate FDI ROI?

Start with the total capital you commit to the foreign project (initial and follow‑on investments). Then estimate all cash inflows you expect to receive over time, including operating cash flows and exit value. ROI is the total profit divided by total invested capital. For multi‑year projects, it is better to also look at annualized ROI, NPV and IRR, which this calculator computes for you.

What is a good ROI for FDI?

It depends on the country, sector and risk profile. Global inward FDI rates of return often cluster in the high single digits to low double digits, but frontier markets or high‑risk sectors may require higher returns. As a rule of thumb, your FDI ROI should exceed your risk‑adjusted cost of capital and compensate for illiquidity, political risk and currency volatility.

Should I model FDI ROI in local currency or my home currency?

Ideally you should model both. Operational forecasts are often in local currency, but your investors care about returns in their home currency. You can convert expected cash flows using FX scenarios and then run this calculator in the home‑currency view to see the impact of devaluation or appreciation on ROI, NPV and IRR.

Can I use this calculator for FDI marketing ROI?

Yes. If you are evaluating the ROI of FDI attraction campaigns (e.g., investment promotion agency marketing), treat the campaign budget as the investment and the incremental FDI inflows or tax revenues as returns. The same ROI, NPV and IRR logic applies, but your cash flows will be public‑sector rather than corporate.