A company has a process improvement initiative that is projected to increase revenue by $150,000 USD non- compounded per year. The budgeted cost of the initiative is $200.000 and supporting the…

44% results from an incorrect application of the ROI formula, likely using net benefit as a proportion of total revenue rather than total cost, or excluding one year of revenue from the calculation.

Total benefit = $150,000 x 3 = $450,000. Total cost = $200,000 (initial) + $30,000 (year 2 support) + $30,000 (year 3 support) = $260,000. ROI = ($450,000 - $260,000) / $260,000 = $190,000 / $260,000 = 0.7307, or approximately 73%, which matches answer B and correctly applies the standard ROI formula using all costs and all benefits over the full period.

40% results from an incorrect calculation, possibly dividing net benefit by an inflated denominator that incorrectly includes revenue alongside costs.

51% results from an incorrect calculation, most likely using only two years of revenue ($300,000) in the numerator while still applying the full three-year cost base of $260,000.