If you can earn a 4% average return on your investments, how much invested capital must you have to earn $53000.00 per year.
0.04x = 53,000
x = 1,325,000
To find out how much invested capital you need, we can use the concept of the "return on investment" (ROI) formula. The formula is:
ROI = (Net Income / Invested Capital) * 100
In this case, you want to earn $53,000 per year, and the average return on your investments is 4%.
Step 1: Convert the ROI to decimal form.
4% is equivalent to 0.04, as it is divided by 100.
Step 2: Rearrange the formula to solve for Invested Capital.
Invested capital = Net Income / ROI
Step 3: Substitute the given values into the formula.
Invested capital = $53,000 / 0.04
Step 4: Calculate the result.
Invested capital = $1,325,000
Therefore, you would need to have $1,325,000 in invested capital to earn $53,000 per year with a 4% average return on your investments.