Which scenario would most likely result in a positive ROI?

Which scenario would most likely result in a positive ROI?

• A. Investing in a project with total costs exceeding total profits
• B. Investing in a project that generates greater profits than the initial cost
• C. Investing in a project with no associated costs
• D. Investing in a project with uncertain returns

Answer: (B)

Investing in a project that generates greater profits than the initial cost is the scenario that leads to a positive Return on Investment (ROI). ROI is a measure of the profitability of an investment, calculated by taking the net profit from the investment and dividing it by the initial cost of the investment. When the profits from the project exceed its initial costs, the net profit becomes positive, resulting in a positive ROI. This means that for every dollar invested, there is a return greater than one dollar, indicating that the investment is worthwhile and financially sound. The other scenarios do not meet the criteria for achieving a positive ROI. For example, investing in a project where total costs exceed total profits would lead to a negative ROI, as the expenses outstrip the revenue generated. Similarly, investing in a project with no associated costs could theoretically present an unusual or unrealistic scenario since, in practical applications, there are typically some costs involved. Finally, investing in a project with uncertain returns brings in an element of risk that doesn’t guarantee a positive return, and without specific profit figures, it cannot be determined whether ROI would be positive.

Investing in a project that generates greater profits than the initial cost is the scenario that leads to a positive Return on Investment (ROI). ROI is a measure of the profitability of an investment, calculated by taking the net profit from the investment and dividing it by the initial cost of the investment.

When the profits from the project exceed its initial costs, the net profit becomes positive, resulting in a positive ROI. This means that for every dollar invested, there is a return greater than one dollar, indicating that the investment is worthwhile and financially sound.

The other scenarios do not meet the criteria for achieving a positive ROI. For example, investing in a project where total costs exceed total profits would lead to a negative ROI, as the expenses outstrip the revenue generated. Similarly, investing in a project with no associated costs could theoretically present an unusual or unrealistic scenario since, in practical applications, there are typically some costs involved. Finally, investing in a project with uncertain returns brings in an element of risk that doesn’t guarantee a positive return, and without specific profit figures, it cannot be determined whether ROI would be positive.