If ROI is net profit divided by initial investment, what is ROI for net profit $200 and initial investment $1000?

If ROI is net profit divided by initial investment, what is ROI for net profit $200 and initial investment $1000?

• A. 0.2%
• B. 200%
• C. 20%
• D. 2%

Answer: (C)

ROI is net profit divided by the initial investment, usually shown as a percentage. Here, 200 divided by 1000 equals 0.2, which is 20 percent when converted to a percentage. So you earned 20 cents for every dollar invested. The other options would correspond to different profit figures: 0.2% would mean only 2 in profit on 1000, 200% would require 2000 in profit, and 2% would require 20 in profit.

ROI is net profit divided by the initial investment, usually shown as a percentage. Here, 200 divided by 1000 equals 0.2, which is 20 percent when converted to a percentage. So you earned 20 cents for every dollar invested. The other options would correspond to different profit figures: 0.2% would mean only 2 in profit on 1000, 200% would require 2000 in profit, and 2% would require 20 in profit.