Say you're using the standard formula (gain from investment-cost from investment)/(cost from investment) and you client is trying to figure out if acquiring a company is worth it in terms of it being profitable. Is there a standard for what's considered a good/high ROI?
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Depends on the risk profile of the investment and risk appetite of the investor. Do you think the ROI of developing AIDS drugs would be the same as buying government bonds?
I would think most companies would look at IRR, not ROI for this type of decision. In general, as long as the IRR exceeds the buyers' cost of capital, it would be a good investment.
Echoing the above, it's all about earning more than the cost of the risk that you're taking. You might enjoy Bridgewater's "Risk Parity" white paper: http://www.bwater.com/home/research--press.aspx (third link down).
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