Question

I want a solution to this question. It's a software engineering question. thanks.

% Return on Investment (ROI) Break-even Point (BEP) Years (break-even occurs in year:) 2. An investor has an amount of 10,000 SR with two investment options: a. Buy gold and sells it after three years for 12,300 SR. Sales tax worth of 4% applied on the seller. b. Buy silver and sells it after three years for 12,000 SR. Sales tax worth of 1.5% applied on the seller. Calculate ROI for both options, and decide which option is more profitable to invest?

Answer 1

We have two investment options available.So, Let us discuss the ROI of both one by one:-

For Gold- Values given in the question are

Selling price =12,300 SR

Sales Tax=4%

To find the ROI we will use formula selling price -$\frac{Selling Price-Cost Price}{Cost Price}*100$

But there is a Tax on the selling price that is 4% .So,after reducing the tax from selling price

Tax deduction = 12300*(4/100) = 492 SR

Selling Price after Tax deduction = 12300-492 = 11,808

Therefore, ROI for Gold = $\frac{11808-10000}{10000}*100 = 18.08$

Similarly, If Investor Buys  Silver :-

Selling Price= 12,000 SR

Sales Tax= 1.5%

So, Tax Deduction = 12000*(1.5/100) = 180 SR

Selling Price after Tax Deduction = 12000-180 = 11,820

Therefore ROI on Silver = $\frac{11820-10000}{10000}*100 = 18.20$

Hence, on comparing we can clearly see ROI of buying Silver is more than that of Gold by

18.20 - 18.08 = 0.12%

So, We should invest on Silver.