Identify the correct formula for Return on Investment (ROI).
A.
ROI = ((Expected Returns – Cost of Investment) / Cost of Investment) * 100
B.
ROI = (Expected Returns + Cost of Investment) / Cost of Investment
C.
ROI = (Expected Returns Cost of Investment) / Cost of Investment
D.
ROI = ((Expected Returns + Cost of Investment) / Cost of Investment) * 100
Explanation:
Reference:
http://www.investopedia.com/terms/r/returnoninvestment.asp
C. I think a “-” sign is missing in the answer but it’s not important. Because the other choices are wrong. http://www.investopedia.com/terms/r/returnoninvestment.asp
ROI = (Expected Returns – Cost of Investment) / Cost of Investment
Some people say that the formula has to be added a “x 100%” to its tail.
ROI = (Expected Returns – Cost of Investment) / Cost of Investment x 100%
So, maybe 2 versions of this formula are all correct.
A and D add “100,” not “100%.” Therefore, these 2 choices are not correct.