Author: Mohamed Hamza Ghaouri, Intern at FINTERRA

Return on investment (ROI) is a measure used to understand the profitability of an investment. It compares how much an investor paid for an investment and how much he earned to assess its effectiveness. Let’s see how the return on investment is calculated by investing in Finterra Global Plantations Project.

**What Is ROI and how to calculate it?**

Typically, when you invest in an investment or business, ROI helps you understand the profit or loss that your investment has generated. Return on investment is a simple ratio that divides the net profit (or loss) of an investment by its cost.

To calculate the return on investment, we divide the amount earned from that investment (often called net profit, or the cost of the investment minus its present value) by the cost of the investment and multiply it by 100. There are two ways to represent this formula:

1^{st} formula:

**ROI = (Net Profit / Cost of Investment) x 100**

** 2^{nd} **formula:

**ROI = (Present Value – Cost of Investment / Cost of Investment) x 100**

Since it is expressed as a percentage, you can compare the effectiveness or profitability of different investment choices. It is closely related to metrics such as return on equity (ROE) and return on assets (ROA).

**Finterra Global Plantations investment opportunities**

Finterra Global Plantations is an investment opportunity addressed to sustainable investors who are motivated by social and environmental causes as it combines lucrative, social and environmental components in one financial arrangement. This blog focuses more on the lucrative components of the project as we discussed the environmental and social implications on a previous blog . With a minimum of RM60,000 over a forty-month period, investors can earn between 8% and 12% return per year on a quarterly basis while at the end of the investment period (40months), they will get back the initial invested capital.

For an investment tenure of 40 months, Finterra global Plantations presents four packages to the investors:

- Prestige package: With an investment of RM30,000 the investor will be able to generate 6% return annually distributed on a quarterly basis.
- Premium package: With an investment of RM60,000 the investor will be able to generate 8% return annually distributed on a quarterly basis.
- Premier package: With an investment of RM100,000 the investor will be able to generate 10% return annually distributed on a quarterly basis.
- Platinum package: With an investment of RM160,000 the investor will be able to generate 12% return annually distributed on a quarterly basis.

**Finterra Global Plantations ROI**

Following the aforementioned formula, the ROI of the four packages can be calculated as follow:

- Prestige package:

For a RM30,000 investment the investor will get 6% per annum distributed quarterly over 10 Quarters (40months). The yearly ROI for this investment will be RM1800 which is RM450 quarterly.

At the end of the investment period, the investor would have accumulated a total of RM4500 increased by the invested capital.

**ROI = (Net Profit / Cost of Investment) x 100**

**ROI = (4,500/ 30,000) x 100**

**ROI = 15%**

The overall return on investment (ROI) of an investment of RM60,000 for a period of 40 months is 15%

- Premium package:

For a RM60,000 investment the investor will get 8% per annum distributed quarterly over 10 Quarters (40months). The yearly ROI for this investment will be RM4800 which is RM1200 quarterly.

At the end of the investment period, the investor would have accumulated a total of RM12000 increased by the invested capital.

**ROI = (Net Profit / Cost of Investment) x 100**

**ROI = (12,000/ 60,000) x 100**

**ROI = 20%**

The overall return on investment (ROI) of an investment of RM60,000 for a period of 40 months is 20%

- Premier package:

For a RM100,000 investment the investor will get 10% per annum distributed quarterly over 10 Quarters (40months). The yearly ROI for this investment will be RM10,000 which is RM2,500 quarterly.

At the end of the investment period, the investor would have accumulated a total of RM25,000 increased by the invested capital.

**ROI = (Net Profit / Cost of Investment) x 100**

**ROI = (25,0000/ 100,000) x 100**

**ROI = 25%**

The overall return on investment (ROI) of an investment of RM100,000 for a period of 40 months is 25%

- Platinum package:

For a RM160,000 investment the investor will get 12% per annum distributed quarterly over 10 Quarters (40months). The yearly ROI for this investment will be RM19,200 which is RM4,800 quarterly.

At the end of the investment period, the investor would have accumulated a total of RM48,000 increased by the invested capital.

**ROI = (Net Profit / Cost of Investment) x 100**

**ROI = (48,0000/ 160,000) x 100**

**ROI = 30%**

The overall return on investment (ROI) of an investment of RM160,000 for a period of 40 months is 30%.

This easily calculated ROI is an understandable metric for determining the efficiency of the four investment packages. It can be used by regular investors to assess their portfolios, assess their spending, and compare between investment options.