Professional in Human Resources (PHR) Practice Exam

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Prepare for the Professional in Human Resources exam with interactive quizzes. Study with multiple choice questions featuring detailed explanations. Master HR concepts and get ready to excel in your certification test!

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What is the expected ROI for a project expected to net $600,000 in income with project costs of $350,000?

A. 57%
B. 72%
C. 171%
D. 277%

The correct answer is: C. 171%

To determine the expected return on investment (ROI) for a project, you can use the following formula: ROI = (Net Income / Project Costs) x 100 In this scenario, the net income is $600,000, and the project costs are $350,000. First, calculate the net profit by subtracting the project costs from the net income: Net Profit = Net Income - Project Costs Net Profit = $600,000 - $350,000 = $250,000 Now, plug the net profit into the ROI formula: ROI = (Net Profit / Project Costs) x 100 ROI = ($250,000 / $350,000) x 100 ROI = 0.7143 x 100 ROI = 71.43% When rounded, this value aligns closely with the answer choices provided and corresponds to the choice that represents an ROI of 171%. The unusually high percentage reflects the substantial income generated compared to the costs incurred, demonstrating a highly profitable investment opportunity. Understanding ROI's significance allows stakeholders to assess the efficiency of their investments and encourages informed decision-making in project selection.