A company has a process improvement initiative that is projected to increase revenue by $150,000 USD non-compounded per year. The budgeted cost of the initiative is $200.000 and supporting the initiative will cost $30.000 for years two and three. What is the projected return on investment over the first 3 years?

Question

Quizplus · Accepted Answer

The total revenue increase over 3 years is $450,000 ($150,000 per year). The total cost is $260,000 ($200,000 initial cost + $30,000 each for years two and three). The ROI is calculated as (Total Revenue - Total Cost) / Total Cost = ($450,000 - $260,000) / $260,000 = 73%.

A Company Has a Process Improvement Initiative That Is Projected