Question
Alpha Division of the Grande Company produces and sells two products. Each product's operating income and average capital resources are shown below: Product A: Operating
Alpha Division of the Grande Company produces and sells two products. Each product's operating income and average capital resources are shown below:
Product A: Operating Income $500,000; Average capital $5,000,000.
Product B: Operating Income $350,000; Average capital $4,100,000.
1. What is Alpha's ROI for product A and product B?
2. Assuming Alpha's manager has an opportunity to undertake an investment that would require a $500,000 investment and yield $40,000 in net operating income for its product B, what would the ROI be for the entire division?
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Auditing Concepts For A Changing Environment
Authors: Larry E. Rittenberg, Bradley J. Schwieger
5th Edition
0324223102, 978-0324223101
