Presentation Transcript

1. Return On Investment

   By: Jaleesa Meredith
2. Investment When an entrepreneur invests in a business, that means that their putting their time, energy, and money into it. They believe that if they invest in a business, they will get more money out of it in the long run.
3. Return on Investment (ROI) Example: Lemonade Stand Start-up: you need to buy lemonade mix, paper cups, and napkins Cost of supplies: $5(the investment) End of the day: you sold $20 worth of lemonade Calculations: ($5.00 + $15.00 = $20.00) * The $15.00 is the Return on Investment (ROI)
4. Percentage Means “Out of a Hundred” 18 100 ( is a fraction ) 0.18 ( is a decimal )
5. Expressing ROI as a Percentage Step One: Apply the ROI formula Net Profit Investment $15.00 (Net Profit) $5.00 (Investment) Step Two: Express the fraction as a decimal $15.00 / $5.00 = 3 = ROI Step Three: Convert the decimal to a percentage 3.0 X 100 = 300% ROI ROI ROI
6. Risk Is the Chance of Losing Your Money Investments can sometimes be a bad decision. The “risk is the chance of losing your money”. If you buy jewelry for $50,but then you resell it for $100 your asking for $50 more than what you bought it for and can potentially lose both your investment.
7. Risk/Return Relationship Higher return Return Risk Lower risk
8. Risk and Returns Are High in Small Business “Good planning/financing help reduce risk for a small business”. Small scale: when the amount invested is small, you won’t need as much profit to get a good ROI. Quick decision making: small businesses can solve problems and meet customer needs faster than larger ones. Industry knowledge: if the entrepreneur is an expert (or becomes one) in the business, he/she is in a better position to spot warning signs and stay out of trouble. Lower operating costs: entrepreneurs often work to build their businesses without hiring many people, or without paying themselves. Doing so lowers costs. Investing your own time and money in an enterprise for little no pay its called sweat equity.
9. Going to College Is the Best Investment You Can Make Going to college is the best investment you could make. College graduates make at least three times more money. The ROI would be that you earn your investment back many times over as a college graduate than a high school graduate. No high school diploma - $20,724 High school diploma - $34,373 Two-year associate’s degree - $42,500 Four-year college degree - $62,188 Professional degree (master’s or lawyer or doctor) - $95,309
10. Goal Setting Have a goal written down, will most likely help you accomplish them because your mind is set to it. Goals are something that you want to accomplish in life and you have to take your time, energy, and money into it to succeed. If you have a goal, you’ll reach any objective you want.
11. The Time Value of Money Saving will help you in the long run. Safe investments take a longer time, where as riskier ones take less. The Rule of 72 *
12. Vocabulary Goal Something an individual wishes to accomplish in the future Interest Rate Money paid for the use of money, expressed as a percentage per unit of time Investment Something into which one puts money, time, or energy with the hope of gaining profit or satisfaction, in spire of risks Percentage “A given part of a hundred”; a number expressed as part of a whole, with the whole represented as 100 percent Rate of Return The return on an investment, expressed as a percentage of the amount invested Return on Investment(ROI) Profit on an investment, expressed as a percentage Risk The chance of loss Rule of 72 A formula for finding out how long it will take an investment to double in value Sweat Equity The time and effort for little or no pay an entrepreneur puts into a venture in the hope of future return