I'm going to make a business proposition to a businessman. ROI: Year1 - 12.4%, Year 2 - 52.9%, Year 3 -102.5%

Question

He has to invest USD 122000. Does this ROI (Return on Investment) look attractive?

Answer 1

Yes, it does look attractive, very much so. But be careful. When you make your presentation you may encounter some skepticism.

Thats because a typical investment return is somewhere between 10% and 15%. Anything above this, such as a 100% profit, is generally considered excessive and unrealistic. So be prepared. When you tell your potential investors they can expect big, big returns they will probably ask, "Why so high?" Of course, a savy investor will take into consideration the industry.

A liquor store owner for example might be satisfied with 10 to 12% a year. But not investors in a biotechnology or pharmaceutical company. These are high risk industries and investors expect a bigger pay out. So before your first meeting, you may want to ask yourself a simple yet important question, Are your estimates in line with other successful companies in the same or similar business?

If not, be prepared to explain why.

Good luck!
Chris

Answer 2

Not from someone on Yahoo answers.