Question

You have set a goal of a 15% ROI for your business. You figure you will need to invest $1,500,000 and your net profit will be 10% of revenue. What revenue will you need?

Answer 1

Answer:

$2,250,000

Explanation:

ROI is calculated by dividing net profits by the initial investment.

ROI = Net profits/ initial investment.

In this case: 15% or 0.15 =  net profits/ $1,500,000

0.15 = Np/ $1,500,000

Np= $1,500,000 x 0.15

Net profit =$225,000

The profit is 10% of revenue.

i.e., $225,000 is 10% of revenue

Revenue = $225,000/ 10 x 100

Revenue =$22,500 x 100

Revenue = $2,250,000