The first cost of a waterjet machine to be used for slicing cheese is $60,000. The machine will generate net annual income of $11,955 during its useful life of 10 years. Determine the rate of return of on investment in this machine. Express the answer as an integer. For example, enter 10 for 10%. (Hint, this problem can be solved from the Compound Interest Factors tables)
ROI measures the amount of return on an investment relative to the investment’s cost. To calculate ROI, the benefit (or return) of an investment is divided by the cost of the investment, and the result is expressed as a percentage or a ratio. In our case ROI = (11,955*10 - 60,000)/60,000*100% = 99.25%, so the rate of return of on investment in this machine is 99.25%.
Read more: Return On Investment (ROI) Definition | Investopedia http://www.investopedia.com/terms/r/returnoninvestment.asp#ixzz3phC5jYsc