Meaning of Projected ROI
Projected return on investment shows the percentage of profit expected from the total amount invested in a project. It helps investors evaluate how efficiently their money is being used. A higher ROI indicates better performance and profitability.
- Compares profit to the cost of investment
- Expressed as a yearly percentage
- Used in decision-making for business or property investment
ROI Calculation Overview
The ROI is calculated by subtracting the total investment cost from expected profit and dividing the result by the total investment. This shows how much return is generated for every unit of money invested. It does not account for time or inflation.
- Total investment: three crore
- Yearly net profit: seventy lakh
- Projected ROI: around twenty three percent annually
Importance of ROI
Understanding projected ROI helps measure financial success before committing to a project. It supports comparisons between multiple investment options and helps prioritize projects with better returns. It also helps identify risk and plan budgets.
- Helps assess profitability and efficiency
- Guides funding and resource allocation
- Supports long-term investment planning