raquel went to a private university that cost $250,000 total. she took out student loans with a 5% interest…

raquel went to a private university that cost $250,000 total. she took out student loans with a 5% interest rate to pay for her tuition, but she dropped out before graduating. she works in a retail store part time and earns $25,000 per year and needs to start paying back her loans. negative roi positive roi

raquel went to a private university that cost $250,000 total. she took out student loans with a 5% interest rate to pay for her tuition, but she dropped out before graduating. she works in a retail store part time and earns $25,000 per year and needs to start paying back her loans. negative roi positive roi

Answer

Explanation:

Step1: Define ROI formula

ROI = $\frac{Net\ Profit}{Cost\ of\ Investment}\times100%$. Net profit is earnings - cost. Here, she has not completed her degree which may limit her earning potential. Her cost of investment is the $250000$ in student - loans. Her annual earnings are $25000$. Assuming no significant increase in earnings without a degree and considering the loan principal and interest, her net profit is likely negative.

Step2: Analyze the situation

She has a large debt ($250000$) with $5%$ interest. Her annual income of $25000$ is not sufficient to quickly pay off the loan and cover living expenses. The cost of her education (investment) has not resulted in a high - enough return in terms of increased earnings. So, the ROI is negative.

Answer:

Negative ROI