From the following information calculate return on investment and… - Vidyadip

Question

From the following information calculate return on investment and return on equity. Rishab and Hrithik quit their jobs with established companies to start an egg restaurant in the city. Their friend Vikas Nema, who is still works at a bank, has invested money in the restaurant and works there on Saturdays and Sundays. They opened 'Ostrich'-The egg café near Chappan Dukan, the city's famous eating joint in New Palasia area. The eating joint which opened two months ago sells variety of egg dishes with a twist. They initially invested ₹ 28, 46,000 in which ₹ 24,00,000 own money and borrowed a loan from bank for ₹ 4,60,000 at an Interest rate 10% per annum. Assumed tax rate to be 50%.

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Answer

From the above calculation of ROI and ROE all friends are very much satiefied and consider it as a good tool for measuring the returns.
For a true measure of how- own money is being used, ROE is a good indicator.
And how the- total money is being used ROI, is a good indicator.

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