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. What if Mary invested additional capital of K200,000, show the return on investment and return of investment if her profit stands at K40,000 for another year and takes K 30,000 for her personal use. Determine her return on investment & return of on investment.

Question

. What if Mary invested additional capital of K200,000, show the return on investment and return of investment if her profit stands at K40,000 for another year and takes K 30,000 for her personal use. Determine her return on investment & return of on investment.

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Solution

To calculate the Return on Investment (ROI) and Return of Investment (ROI), we first need to understand what these terms mean:

  1. Return on Investment (ROI): This is a measure used to evaluate the efficiency or profitability of an investment. It is calculated by dividing the net profit from the investment by the cost of the investment, and then multiplying the result by 100 to get a percentage.

  2. Return of Investment (ROI): This is the money that an investor gets back from an investment.

Now, let's calculate:

Step 1: Calculate the total investment. Mary initially invested K200,000.

Step 2: Calculate the net profit. Mary made a profit of K40,000 but took K30,000 for personal use. So, her net profit is K40,000 - K30,000 = K10,000.

Step 3: Calculate the Return on Investment (ROI). Using the formula mentioned above, ROI = (Net profit / Total investment) * 100. Substituting the values, we get ROI = (K10,000 / K200,000) * 100 = 5%.

Step 4: Calculate the Return of Investment. This is the money that Mary gets back from her investment. So, her return of investment is her initial investment plus her net profit, which is K200,000 + K10,000 = K210,000.

So, Mary's Return on Investment is 5% and her Return of Investment is K210,000.

This problem has been solved

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