How is the rate of return expressed?

The rate of return is a key financial metric that evaluates the profitability of an investment relative to its cost. When expressed as a percentage relationship between net income and invested capital, it provides a clear and standardized way to assess performance over different investments or projects.

This calculation allows investors and developers to compare the efficiency and profitability of various investments, as it shows how much profit is generated for each unit of capital invested. It highlights the effectiveness of the investment strategy and informs decision-making regarding future investments.

In contrast, the other options do not sufficiently capture the essence of the rate of return. While total amount received relates to cash flows, it fails to consider the initial investment cost. Gross revenue over expenses does not provide a direct relationship to the invested capital, nor does it summarize the profitability adequately. Finally, expressing a rate of return as annual salaries divided by the number of employees is not relevant to investment performance or capital returns. Thus, the percentage relationship format is the most useful and widely accepted method for expressing rate of return.