What are the different methods to calculate ROI?
There are several methods to calculate ROI, including the basic ROI formula, the net present value (NPV) method, and the internal rate of return (IRR). Would you like to know more about any specific method?
Can you explain the basic ROI formula?
Sure! The basic ROI formula is: ROI = (Net Profit / Cost of Investment) x 100. This gives you a percentage that represents the return on your investment.
What is the net present value method?
The net present value (NPV) method calculates the value of future cash flows in today's terms. It helps assess the profitability of an investment by considering the time value of money.
How does the internal rate of return work?
The internal rate of return (IRR) is the discount rate that makes the net present value of all cash flows from an investment equal to zero. It's used to evaluate the attractiveness of a project.
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