You must prepare a return on investment analysis for the regional manager of Fas

Question

You must prepare a return on investment analysis for the regional manager of Fast & Great Burgers. This growing chain is trying to decide which outlet of two alternatives to open. The first location (A) requires a $500,000 investment and is expected to yield annual net income of $80,000. The second location (B) requires a $200,000 investment and is expected to yield annual net income of $46,000.

Compute the return on investment for each Fast & Great Burgers alternative.

Location A

OR

You must prepare a return on investment analysis for the regional manager of Fast & Great Burgers. This growing chain is trying to decide which outlet of two alternatives to open. The first location (A) requires a $500,000 investment and is expected to yield annual net income of $80,000. The second location (B) requires a $200,000 investment and is expected to yield annual net income of $46,000.

Explanation / Answer

A Return on Investment Income / Investment = ROI / = ROI Location A $80,000 $500,000 16% Location B $46,000 $200,000 23% B Company should prefer Location B having higher ROI I.e, 23%

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