If estimates for total discounted benefits for a project are $120,000 and total discountedcosts are $100,000, what is the estimated return on investment (ROI)?a. $20,000b. $120,000c. 20 percentd. 120 percen
Question
If estimates for total discounted benefits for a project are 100,000, what is the estimated return on investment (ROI)?a. 120,000c. 20 percentd. 120 percen
Solution
The Return on Investment (ROI) is calculated using the formula:
ROI = (Net Profit / Cost of Investment) * 100%
In this case, the Net Profit is the total discounted benefits minus the total discounted costs. So, the Net Profit is 100,000 = $20,000.
The Cost of Investment is the total discounted costs, which is $100,000.
So, the ROI would be (100,000) * 100% = 20%.
Therefore, the answer is c. 20 percent.
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