Question

Ramya is preparing an economic feasibility study. She has a calculation where she takes total benefits minus total costs and divides that answer by the total costs. She is calculating:______________

a) Cash flow
b) Return on investment
c) Break-even point
d) Net present value
e) Internal rate of return

Answer 1

B, return on investment

Step-by-step explanation:

Return on investment, ROI, is a measure of the gain or loss on an investment in relation to the amount of money invested. Return on investment is usually used for personal financial decisions or for the comparison of a firm's profitability or a firm's measure of efficiency in the investment market and with different investments.

Return on investment is usually calculated in percentage since it is a ratio between profit and investment cost.

The formula for ROI is : Net profit x 100%

Total investment

Returns on investment can either be high or low. When ROI is high, it means that there is more profit than cost of investment. A low ROI on the other hand means that the profit is not as much as the cost of investment.

Cheers.