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You must prepare a return on investment analysis for the regional manager of Fast & Great Burgers. This growing chain is trying to decide which outlet of two alternatives to open. The first location (A) requires a $1,000,000 investment and is expected to yield annual net income of $160,000. The second location (B) requires a $600,000 investment and is expected to yield annual net income of $108,000. Compute the return on investment for each Fast & Great Burgers

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mltn1980

Answer:

Compute the return on investment for each Fast & Great Burgers

The second location (B) : 18%

Explanation:

The return on investment is a financial ratio that let the investor know how much the investor will receive in relation to their investment.

One of the most used Return on Investment formula indicates:

ROI: Net Income / Cost of investment

In this case:

Project A)

Annual Net Income $160,000  

Investment: $1,000,000  

ROI : $160,000/$1,000,000 = 16%

Project B)

Annual Net Income $108,000  

Investment: $600,000  

ROI : $108,000/$600,000 = 18%

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