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IRISSAK [1]
3 years ago
15

Calculating the return on investment using financial leverage. suppose Dave invested only 20,000 of his own money and borrowed 1

80,000 interest-free from his rich father. what was his return on investment?
Mathematics
1 answer:
Veronika [31]3 years ago
6 0
His return on investment (ROI) is based solely on money from his pocket.
If the profit is x dollars, the ROI is x/20000.  Here Dave levered 10:1 with the help of his father.  
If he had invested totally with his own money, the ROI would be x/200000, a much less impressive number even though the profit is the same.

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