How is the ROI calculated if the investment is $1000 and the returns are $1500?

How is the ROI calculated if the investment is $1000 and the returns are $1500?

• A. 50%
• B. 30%
• C. 100%
• D. 75%

Answer: (A)

To determine the return on investment (ROI), the formula used is: \[ ROI = \frac{{\text{Net Profit}}}{{\text{Cost of Investment}}} \times 100 \] In this scenario, the cost of investment is $1000, and the returns (total revenue) are $1500. To find the net profit, subtract the initial investment from the total returns: \[ \text{Net Profit} = \text{Returns} - \text{Investment} = 1500 - 1000 = 500 \] Now, plug the net profit and cost of investment into the ROI formula: \[ ROI = \frac{{500}}{{1000}} \times 100 = 50\% \] This calculation shows that you made a profit that is 50% of your initial investment, which signifies a positive investment outcome. Therefore, the correct answer is 50%, reflecting a solid understanding of how to evaluate the effectiveness of an investment.

To determine the return on investment (ROI), the formula used is:

[ ROI = \frac{{\text{Net Profit}}}{{\text{Cost of Investment}}} \times 100 ]

In this scenario, the cost of investment is $1000, and the returns (total revenue) are $1500. To find the net profit, subtract the initial investment from the total returns:

[ \text{Net Profit} = \text{Returns} - \text{Investment} = 1500 - 1000 = 500 ]

Now, plug the net profit and cost of investment into the ROI formula:

[ ROI = \frac{{500}}{{1000}} \times 100 = 50% ]

This calculation shows that you made a profit that is 50% of your initial investment, which signifies a positive investment outcome. Therefore, the correct answer is 50%, reflecting a solid understanding of how to evaluate the effectiveness of an investment.