Question

Jordan, the owner of a motorcycle firm, wants to reduce the cost of maintaining the existing equipment of his firm. Joe, a salesperson, recommends a new type of equipment to reduce the maintenance costs. The cost of the new equipment is $50,000, but it would save Jordan $75,000 in total. If Jordan decides to purchase the new equipment, then his return on investment will be: ___________

Answer 1

If Jordan decides to purchase the new equipment, then his return on investment will be: 150%.

Using this formula

Return on investment=Amount saved in total/Cost of new equipment ×100

Where:

Amount saved in total=$75,000

Cost of new equipment=$50,000

Let plug in the formula

Return on investment=$75,000/$50,000×100

Return on investment=150%

Inconclusion if Jordan decides to purchase the new equipment, then his return on investment will be: 150%.

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