Question
Brutus is a division of Madam Medusas Pawn Shop/Boutique, Inc. Last year, the division generated operating income of $609,840 and sales revenue of $10,890,000. The
Brutus is a division of Madam Medusas Pawn Shop/Boutique, Inc. Last year, the division generated operating income of $609,840 and sales revenue of $10,890,000. The division had invested capital of $3,000,000. Using only the information given, which of the following statements is correct?
A.
If the divisions manager is evaluated based on maintaining the divisions current Return on Investment, he would accept an investment opportunity that would yield a return of 18%.
B.
For every dollar of sales revenue generated, $0.56 of income is earned.
C.
If the company's hurdle rate is less than 20%, the residual income for Brutus is negative.
D.
For every dollar of capital invested, $3.63 of income is earned.
E.
For every dollar of capital invested, $0.20 of income is earned.
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