Practicing Success

Target Exam

CUET

Subject

Entrepreneurship

Chapter

Business Arithmetic

Question:

Select the correct options related to Return on Investment (ROI)

A. $ROI=\frac{Net\, Income}{Equity}×100$

B. It indicates how own money is being used.

C. It will include not only what the investor spent out of his/her pocket, but also the borrowed funds

D. It equals the net income from a business divided by the total money invested in the venture multiplied by 100

E. $ROI=\frac{Net\,profit}{Total\,capital\,invested}×100$

Choose the correct answer from the options given below:

Options:

A, B and D only

B, C and D only

C, D and E only

B, C and E only

Correct Answer:

C, D and E only

Explanation:

Return on investment equals the net income from a business or a project divided by the total money invested in the venture multiplied by 100 (D). When calculating ROI, the investment will include not only what the investor spent out of his/her pocket, but also all borrowed funds. (C)


 $ROI=\frac{Net\,profit}{Total\,capital\,invested}×100$ (E)

ROI shows how own money and the borrowed money is being used. So statement B is partially correct.