Question on the ROI calculation

Question

I wonder why we only include license costs rather than operating costs and salary in calculating the ROI.

Answer 1

Hi there,

Yes, you could also include those.

Don't take the suggested answers to these sort of cases as absolute truth. Instead, think of them as guidance.

Seek instead to figure out how the suggested solution could improve your own rather than how it could replace it.

Best,
Cristian

Answer 2

Hi there,

I agree with you. Based on my understanding of this case, you should indeed include operating costs and salary.

Answer 3

Hi there,

I believe ROI looks at return i.e. profit on the initial cost only. Operational costs are not required for this formula.

I hope this helps.

Answer 4

Dear, Thank you for your question. Please note that your annual recurring profit is not $31.2 million (it's only for... (read entire answer)

Dear, Thank you for your question. Please note that your annual recurring profit is not $31.2 million (it's only for the first year); instead, starting from Year 2 onwards, tota... (read entire answer)