Question
Alpha Division of the GrandeCompany produces and sells two products. Each product's operating income and average capital resources are shown below: Product A: Operating Income
Alpha Division of the GrandeCompany 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.
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, how would I calculate the ROI for the entire division?
- 8%
- 9%
- 10%
- 11%
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Financial Accounting
Authors: Robert Libby, Patricia Libby, Frank Hodge
10th edition
1259964949, 1259964947, 978-1259964947
