Your customer is on the verge of spending $1,2M on a new HPE Synergy 120000 deployment for the ERP system. Over the next three years they expect to see $600,000 per year in earnings. What would the…

Question

Options

• A10%
• B20%
• C50%
• D75%

• A
  22% (5)
• B
  65% (15)
• C
  4% (1)
• D
  9% (2)

Explanation

Option B (20%) is the answer the exam expects, derived by calculating the net gain over three years ($600,000 × 3 = $1,800,000 total earnings minus the $1,200,000 investment = $600,000 net gain), then dividing by the sum of the investment and total returns ($1,200,000 + $1,800,000 = $3,000,000): $600,000 / $3,000,000 = 20%. Options A (10%) and D (75%) don't match any reasonable interpretation of the given figures. Option C (50%) is the result of the standard ROI formula-net gain divided by cost alone ($600K / $1.2M)-which is why it's the most tempting distractor; the exam uses a more conservative formula that divides net gain by total capital (investment plus returns), not just the investment.

Memory tip: When an exam question involves "total capital deployed" (investment + total revenue), use the formula Net Gain ÷ (Cost + Total Revenue)-if you see a 3-year window with numbers that look like they should give 50%, check whether the denominator should be the full capital pool instead of just the cost.

Note for exam takers: The standard business ROI formula (Net Gain / Cost × 100) yields 50% here-and many financial professionals would call that the correct answer. If your exam uses a different ROI framework, confirm which formula your course material specifies before test day.

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