Question
An investment center manager is considering three possible investments. The companys required return is 10%. The required asset investment, controllable margins, and the ROIs of
An investment center manager is considering three possible investments. The companys required return is 10%. The required asset investment, controllable margins, and the ROIs of each investment are as follows:
| Project | Average Investment | Controllable Margin | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| AA | $165,000 | $38,950 | ||||||||
| BB | 145,000 | 23,450 | ||||||||
| CC | 225,000 | 73,070 | ||||||||
The investment center is currently generating an ROI of 23% based on $1,205,000 in operating assets and a controllable margin of $283,000. If the manager can select only one project, determine which is the best choice to increase the investment centers ROI by computing the investment centers ROI for each of the investment alternatives. (Round answer to 1 decimal place, e.g. 52.5.)
_____
| is the best choice and ROI will ______ percentages rounded to 1 decimal place %. |
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Principles Of Cost Accounting
Authors: Robert E. Schmiedicke, Charles F. Nagy, Edward J. Vanderback, E.J. Vanderbeck C.F. Nagy
9th Edition
0538812915, 978-0538812917
