return on investment explanation
- Finance
Investment Equation
Investment Equation There isn’t a single universal “investment equation” that applies to all situations. However, there are a couple of key metrics used to evaluate investments and some formulas that can be helpful. Here’s a breakdown: Return on Investment (ROI): This is a common metric to gauge the profitability of an investment. ROI Formula: ROI = (Net Return / Investment Cost) * 100 (expressed as a percentage) Net Return = Selling Price – Purchase Price + Income from Investment…
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Return On Investment
Return On Investment Return on Investment (ROI) is a metric used to evaluate the efficiency or profitability of an investment. It essentially compares the gain or loss from an investment to its cost. Here’s a breakdown of ROI: Purpose: Helps assess the success of an investment relative to the resources put into it. Calculation: ROI is typically expressed as a percentage and is calculated using the following formula: ROI = (Profit - Cost) / Cost * 100 Interpretation: A positive ROI indicates a gain from the investment, meaning the profit…
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