Question

QUESTION: Assume that you are working in the IT Department of a large-scale company. You have decided to develop an application with your colleagues, which is a kind of transportation application that people can use when they go to work in daily life. The working logic of the application is simply downloading the application to the phone and you are traveling with people who are on the same route. The application has a monthly subscription system, so you travel at a more affordable price.It is important to be safe in practice, so you can see the information of the driver and other passengers. After several meetings with the Sales Department, you have decided to prepare a project proposal to be presented in front of the management board to get their approval. I Before the project proposal you need to mention about some of the important issues.One of the issue is; • ROI (Return On Investment)Calculation Describe this issue according to the scenario above. And add example for Return Investment Calculation

Answer 1

Return on Investment (ROI) is the ratio of performance measurement.
Expected ROI with respect to development of this application is should
be positive to grant the approval for the same. We need to make the
projection for net income for upcomming year and percentage of the
same on invested amount.
For example if this project estimated cost shall be $ 7,00,000 and expected
average net income for a year to be $ 1,50,000. then ROI shall be 21.43% as
percentage of net income over investment.
We have to analyse this return with the industry. Suppose if for a company
development almost same type of application having ROI 20%. Then definitely
our proposal should get approved.
Some of issue must need to understand the time gap between earning profit
between two project has to be uniform before comparing the same. Suppose
if in the above example industry ROI is 20% within a year of investment while
ROI for our project is generating with in two year, then first we need to make it
annual as 10.72 % (21.43/2). So ROI become lower than industries. That means
need more research and action.