A business is planning to invest in a new machine which will cost £220 000. The machine will lead to an annual increase in revenue of £75 000. It will also lead to extra labour costs of £28 000 per annum but will reduce the firm’s energy costs by £4 000
Annual return is £75 000 – £28 000 + £4 000 = £51 000 Return on investment = annual return x 100 = £51 000 x 100 = initial cost £220 000 Answer = 23.2% or 23%
Answered by Dylan S. • Business Studies tutor
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