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Joseph invested ₹ 1,000 in a pizza restaurant in 2018 and sold the shares for a total of ₹ 1,200 one year later. While looking at the accounts, he wanted to calculate the return on investment for his restaurant. To calculate it, he divided the net profits by the investment cost. Calculate and confirm how much would be the return on investment for Joseph’s restaurant.  
  • a)
    10%
  • b)
    20%
  • c)
    15%
  • d)
    25%
Correct answer is option 'B'. Can you explain this answer?
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Joseph invested 1,000 in a pizza restaurant in 2018 and sold the shar...
Formula Return on Investment (ROI)
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Joseph invested 1,000 in a pizza restaurant in 2018 and sold the shar...
To calculate the return on investment (ROI), we need to subtract the initial investment cost from the total sales and then divide it by the initial investment cost.

Total sales - Initial investment cost = Net profit

$1,200 - $1,000 = $200

Net profit / Initial investment cost = ROI

$200 / $1,000 = 0.2 or 20%

Therefore, the return on investment for Joseph's pizza restaurant is 20%.
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