Question

Last year, a company had stockholders equity of $160,000, NOI of $16,000 and sales of $100,000. The turnover was .5. The return on investment was:

1) 10%
2) 9%
3) 8%
4) 7%

Answer 1

The return on investment (ROI) can be calculated using the formula: ROI = Net Operating Income (NOI) / Stockholders' Equity. In this case, the ROI is 10%. Therefore, the correct answer is option 1)

Step-by-step explanation:

An approximation of the profitability of an investment is its return on investment, or ROI. ROI is computed by deducting the investment's original cost from its end value, dividing the result by the investment's cost, and then multiplying the result by 100.

The return on investment (ROI) can be calculated using the formula: ROI = Net Operating Income (NOI) / Stockholders' Equity. In this case, the NOI is $16,000 and the stockholders' equity is $160,000. Therefore, the ROI is: 16000 / 160000 = 0.1, or 10%.

This means that for every dollar of stockholders' equity, the company generated 10 cents of profit. So, the correct answer is option 1) 10%.