Tennill Inc. has a $1,400,000 investment opportunity with the following characteristics: Sales $4,480,000
Contribution margin ratio 40% of sales
Fixed expenses $1,657,600

The ROI for this year's investment opportunity considered alone is closest to:
A. 8.1 %
B. 128.0 %
C. 3.0 %
D. 9.6 %

D. 9.6 %

Explanation:

ROI is a  financial ratio that communicates the how efficient business has been in generating profits using its capital.

The formula for ROI is Net profit/ investments x 100

For Tennil

Investments are $1,400,000

Net profits= sales - fixed cost + variable costs.

Sales: $4,480,000

Fixed costs: $1,657,600

variable costs ?

if contribution margin ration is 40% of sales

Contribution margin is 40/100 x 4,480,000= $1, 792,000

Contribution margin = sales- variable costs

$1, 792,000= $4480,000- variable costs

variable costs= $4,480,000- $1,792,000

variable costs = $2,688,000

Net profits = $4,480,000 - ($1,657,600+  $2,688,000)

Net profits =$134,400

ROI = $134,400/1,400,000 x 100

ROI = 0.096 x 100

ROI =9.6 %

an online clothing brand

explanation:

750 h and costs $0.60 per bulb.