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22 June, 05:35

You are using ROI to evaluate a project that requires investments of $500 in each of the first 3 years, and yields annual income of $100, $50, and $25 in each of the first 3 years. What would happen to ROI if the annual incomes double?

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  1. 22 June, 05:50
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    ROI doubles

    Explanation:

    The formula to compute the return on investment is shown below:

    Return on investment = (Annual income) : (Initial investment)

    If we take the first case,

    Annual income = $100

    And, the investment = $500

    So, the ROI = $100 : $500 = 0.2

    If the annual income doubles i. e $200

    So, the ROI = $200 : $500 = 0.4

    So in the given case, the ROI also doubles
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Home » Business » You are using ROI to evaluate a project that requires investments of $500 in each of the first 3 years, and yields annual income of $100, $50, and $25 in each of the first 3 years. What would happen to ROI if the annual incomes double?
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