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You have a small business. Your first-year financials are as follows:

- Start-up costs: $60,800
- Gross sales: $65,800
- Total expenses: $28,500
- Income taxes: $6,370

What is the return on investment (ROI) for your first year of business?

A. 1.96%
B. 51%
C. 61%
D. 92%

Sagot :

GinnyAnsweridn
To solve this problem, we need to determine the return on investment (ROI) for the first year of business. The ROI is calculated using the following formula:

[tex]\[ \text{ROI} = \left( \frac{\text{Net Profit}}{\text{Start-up Costs}} \right) \times 100 \][/tex]

Firstly, we need to calculate the Net Profit. The Net Profit can be determined by subtracting the total expenses and income taxes from the gross sales.

Given:
- Start-up costs: $60,800
- Gross sales: $65,800
- Total expenses: $28,500
- Income taxes: $6,370

The Net Profit is calculated as follows:

[tex]\[ \text{Net Profit} = \text{Gross Sales} - \text{Total Expenses} - \text{Income Taxes} \][/tex]

Substitute the values into the formula:

[tex]\[ \text{Net Profit} = 65,800 - 28,500 - 6,370 \][/tex]
[tex]\[ \text{Net Profit} = 30,930 \][/tex]

Next, we calculate the ROI by substituting the Net Profit and Start-up Costs into the ROI formula:

[tex]\[ \text{ROI} = \left( \frac{30,930}{60,800} \right) \times 100 \][/tex]

This simplifies to:

[tex]\[ \text{ROI} \approx 50.871710526315795 \][/tex]

Hence, when rounded to the nearest whole number, the ROI is approximately 51%.

Therefore, the correct answer is:

OB. 51%
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