# Homework Help: Determining the most efficient use of capital ?

1. Jul 20, 2012

### Aston08

How would I calculate which of the 2 options is the most efficient use of the capital?

With $5,000 of capital ... 1.) I can purchase and resell 20 units for a$1000 profit

2.) I can purchase and resell 200 units for a \$1500 profit

Obviously option #2 is the most profitable but also requires 10x the work. Option #1 has a better profit margin, but less return on investment.

Outside of determining which aspect is more important that the other, is there a way to determine which is the most efficient use of the capital with the given information? ..or am I missing another variable ?

2. Jul 20, 2012

### Staff: Mentor

Consider the work involved, ie assign an hourly rate of x dollars, or use a commission per item sold rate.