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Rate of return equation for business investment?

If $7000 was invested in a new business and the net income at the end of the year was $20,310, how would I determine the rate of investment? I tried (($20310 - $7000) / $7000) × 100% = 1.09% Is that right? That seems like it can't be right...

Public Comments

1. To calculate your " Cash-on-Cash Return" . Take the amount of cashflow in a year ($20,310), and divide it by the amount of cash you put into the deal ($7000). This is the % return you' re getting on the money you put in yourself. So you would calculate by dividing your income by your initial investment and multiply x 100. $20,310/$7,000 = 2.901 x 100 = 290% ROI This may seem like a large Return on investment to you, but you can check the equation by doing it backwards. If you invest $7,000 at 290% ROI what will you make? 7000x2.9 = 20300