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Two acquaintances have approached you about investing in business activities in which each is involved. Simone is seeking $575, and Riley needs $680. One year from now, your original investment will be returned, along with $52 income from Simone or $55 income from Riley. You can make only one investment.
Required:
a-1. Compute the ROI of Simone and Riley. (Round your answers to 2 decimal places.) ROI Simone Riley
a-2. Which investment would you prefer? Simone Riley
b. What other factors should you consider before making either investment?

Respuesta :

Explanation:

For Simone:

Funds needed = $575

Additional income after a year = $52

Total returns (ROI) = $627 or +11.81 %

For Riley:

Funds needed = $680

Additional income after a year = $55

Total returns (ROI) = $735 or +7.48%

Simone's investment is better preferred because it has a higher ROI of 11.81 % which is about 4 % greater than Riley'.

Other factors to consider is the associated risk in each investment, and their growth potential.

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