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Return on Investment (ROI)

A financial metric measuring the profitability of an investment relative to its cost. It helps determine the efficiency and effectiveness of an investment by comparing the net profit generated to the initial investment amount. A higher ROI indicates a better return on the money invested.

Example Scenario – A cafe owner in London decides to invest in a new, energy-efficient coffee machine costing £8,000. The machine is expected to reduce energy consumption by 40% and increase coffee production by 15%.