Question

QUESTION9 The publications department of a printing company is evaluating two projects (Project 1 and Project 2). The companys required rate of return is 15%. The department's current Return on investment (R l) is 18%。(Assume all data is in present value.) Project 1 will provide $1,000,000 in earnings and require a $5,000,000 investment Project 2 will provide $700,000 in earnings and require a $4,000,000 investment What is the Return on Investment (ROI) for these two projects? Project 1·$100,000 ROI O a. Project 2 (320) RO Project 1-20% ROI Project 2-1 7.5% ROI Project 1 $250,000 RO Project 2- $100,000 RO Ob. O) d. Project 1-500% ROI Project 2-571% ROI

Answer 1

Ans- The Return on Investment (ROI) for these two projects is:

ROI=Net Income/ Cost of investment *100

Project 1= $1,000,000/ $5,000,000*100

=20% Return on Investment

Project 2= $700,000/ $4,000,000*100

=17.5% Return on Investment

Hence, The correct option is (b).

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