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A division manager is considering investing in a new product. The divisions income is currently $465,000 with operating assets of $8 million. The new product
A division manager is considering investing in a new product. The divisions income is currently $465,000 with operating assets of $8 million. The new product would increase income by $270,000 and would require an additional investment in equipment of $1.5 million. The ROI of the division before and after the investment is respectively:
a. | 5.8% and 7.7% | c. | 7.7% and 5.8% |
b. | 11.6% and 15.8% | d. | Cannot determine |
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