Urban Clinic is establishing a new Women's Breast Center with an initial investment of $2,000,000. Monthly operating expenses are $100,000, and the center is expected to generate $40,000 in profits each month. What is the estimated return on investment for one year?

• A. -5%
• B. -10%
• C. -24%
• D. -48%

Answer: (C)

Return on investment measures how much net profit you earn for every dollar invested. Here, the center is expected to generate 40,000 in profit each month, so the annual net profit is 40,000 × 12 = 480,000. The initial investment is 2,000,000. ROI is 480,000 divided by 2,000,000, which equals 0.24, or 24%. The monthly operating expenses are already reflected in the monthly profit figure, so there’s no additional subtraction needed. Therefore, the estimated return on investment for one year is 24%, a positive return rather than a loss.