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    ladyduck's Avatar
    ladyduck Posts: 2, Reputation: 1
    New Member
     
    #1

    Aug 7, 2010, 11:36 AM
    Should answer B reflect the total ROI or the remaining ROI after Cindy's withdrawal?
    Cindy invested $200,000 into a business that earned a profit of $2,700 during the past month. Cindy believes the business will earn an annual profit equal to 12 times the monthly profit. Assume Cindy wants to take $25,000 from the business each year for her personal use.

    See table:
    Resources created from sales: $19,000
    Resources consumed:

    Materials: $8,000
    Insurance: $2,000
    Rent: $1,500
    Utilities: $1,300
    Wages: $3,500
    Total cost of resources consumed: $16,300
    Profit earned: $2,700

    a. Determine the company's annual profit.
    b.Determine Cindy's return of investment.
    ArcSine's Avatar
    ArcSine Posts: 969, Reputation: 106
    Senior Member
     
    #2

    Aug 8, 2010, 10:44 AM
    Cindy's ROI is just a comparison--in ratio form--of her annual withdrawals and her initial investment.

    But note carefully: One tiny li'l letter can make all the difference. You've typed the question as "return oF investment" which is a different animal than "return oN investment"; the latter is usually what's intended by "ROI".

    Check to ascertain which one the question's asking for.

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