Final answer:
To satisfy a 20% investor ROI demand with a $50,000 annual net profit, one can invest up to $250,000 in the restaurant concept.
Step-by-step explanation:
To determine the maximum amount you can invest, given a desired net profit and a required investor return, you first need to calculate the expected total return by multiplying the desired net profit by the number of years. In this case, since the investors expect a 20% return on investment (ROI), you could say that the expected net profit divided by the investment amount equals the ROI percentage.
Step-by-Step Calculation:
Determine the required total return: Net Profit / ROI = Investment.
- Use the given figures: $50,000 / 0.20 = $250,000.
- Thus, you can afford to invest up to $250,000 to meet your investors' ROI expectations.
In summary, if your restaurant concept can generate $50,000 in net profit per year, and investors demand a 20% return, you can invest up to $250,000.