Question

Two acquaintances have approached you about investing in business activities in which each is involved. Simone is seeking $605, and Riley needs $650. One year from now, your original investment will be returned, along with $54 income from Simone or $57 income from Riley. You can make only one investment.

Required:
A1. Compute the ROI of Simone and Riley.
A2. Which investment would you prefer?
A. Simone.
B. Riley.
B. What other factors should you consider before making either investment?
A. Fluctuation
B. Risk

Answer 1

Answer and Explanation:

The computation is shown below:

Return on investment = income ÷ investment

For Simone

= $54 ÷ $605

= 8.93%

For Riley

= $57 ÷ $650

= 8.77%

As it can be seen that simone contains the return on investment so the simone would be preferred

Also, the other factor that should be considered before doing any kind of investment i.e. risk