how do I figure out ROI? You are considering investing in a security that will p
ID: 2731589 • Letter: H
Question
how do I figure out ROI?
You are considering investing in a security that will pay you $2,000 in 27 years. If the appropriate discount rate is 8 percent, what is the present value of this investment? Assume these investments sell for $1,091 in return for which you receive $2,000 in 27 years. What is the rate of return investors earn on this investment if they buy it for $1,091? If the appropriate discount rate is 8 percent, the present value of this investment is $ 250.4. (Round to the nearest cent.) The rate of return investors can earn on this investment if they buy it for $1,091 is Square %. (Round to two decimal places.)Explanation / Answer
Return on investment (ROI) is the ratio of a profit or loss made in a fiscal year expressed in terms of an investment.
The basic ROI formula is: Net Profit / Total Investment * 100 = ROI.
SO putting the values given in question ,we get
ROI = (2000 -1091 )×100 / 1091
= 83.32%
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