ROI
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      1. Royal Knowledge
      2. Investing
      3. ROI

      How do you measure ROI?

        • ROI
          Total return on investment. This is total income - total expenses
          • Example: If I invested $100, I made $220, and I had $20 in expenses, I would get a 200% return.
      • Income
        • IRR (internal rate of return) - how much is paid at the exist of the investment (typically 3-5 turnaround)
        • Cash flow/preferred return/pref rate - how much is distributed to you every period (ex: every quarter)
        • Equity multiple - the combined IRR and cash flow at the end of the investment
      • Tax Benefits / Depreciation
        • Depreciation - this allows you to offset your taxable income. So if you make $100 and you have $100 in depreciation, your taxable income would be $0
        • Cash Value - multiply the depreciation amount (ex: $100) by their effective tax rate (20%) to get the cash value ($20) of their depreciation
        • Accelerated depreciation - this means you can take all of your tax benefits faster than usual (ex: first year vs 27 years)
        • Bonus depreciation - this means you get more than 100% depreciation (ex: 150% bonus depreciation means if you put $100 in you get $150 out in tax benefits)