ITPEC FE Morning April 2022 Question 63
ITPEC FE Morning April 2022 — Question 63 of 80
ROI (Return on Investment) measures the return generated by an investment relative to its cost.
It is calculated as: ROI = profit from investment ÷ investment amount
where profit includes gains from sales increases, cost reductions, and other benefits enabled by the computerization project.
Why not others:
- (a) Describes opportunity cost — what is lost by not implementing a project, not ROI.
- (c) Describes NPV (Net Present Value) — the difference between present value of inflows and outflows.
- (d) Describes benchmarking — comparing internal metrics against other companies.
Key rule: ROI = (profit gained) ÷ (investment amount); it measures return efficiency, not comparison or time-value.
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