You are planning to open a bakery in front of an educational institution in which around 4,000 students are studying. The key business features are as under:

Daily footfalls around 800 with growth of 15% per annum
Conversion  rate 75%
Average spend Rs 160
Products offered apart from routine bakery items are coffee, tea both hot and cold
Investment required Rs 14 Lakhs comprising of equipment Rs 10 Lakhs and Furniture and Fixtures Rs 4 Lakhs
Depreciation on equipment is @ 20% pa on SLM
Place on monthly rental of Rs 18,000 with a security deposit of Rs 5 Lakhs not included in the above investment required.
Debt Equity of total investment is 1.5 : 1
Interest on Debt is @ 11.5% per annum and the debt is repayable in 5 equal installments after a moratorium of 1 year
Monthly shop expenses Rs 45,000
Margin on products sold is 30%
Income Tax is paid @ 20%
 

Determine the ROI & ROE.

Answer rating: 100% (QA)

SOLUTION ROI Return on Investment is a financial performance ratio that measures the profitability of an investment relative to its cost It is calcula... View the full answer