How Roi calculation done in case of capex procurement

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Accepted Answer

ROI calculation in capex procurement involves determining the return on investment for capital expenditures.

ROI calculation is done by dividing the net profit generated by the investment by the cost of the investment and expressing it as a percentage.
Net profit is calculated by subtracting the initial cost of the investment from the total revenue or savings generated.
The cost of the investment includes the purchase price, installation costs, and any additional expenses incurred.
ROI helps in evaluating the profitability and efficiency of the investment, and is used to make informed decisions regarding capex procurement.
For example, if a company invests $100,000 in new machinery and generates $20,000 in annual savings, the ROI would be 20% ($20,000 divided by $100,000).

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