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For its three investment centers, Gerrard Company accumulates the following data: I II III Sales $1,990,000 $4,089,000 $3,961,000 Controllable margin 1,393,000 2,044,500 3,564,900 Average operating
For its three investment centers, Gerrard Company accumulates the following data:
I | II | III | ||||
Sales | $1,990,000 | $4,089,000 | $3,961,000 | |||
Controllable margin | 1,393,000 | 2,044,500 | 3,564,900 | |||
Average operating assets | 5,064,000 | 7,982,000 | 12,176,000 |
The centers expect the following changes in the next year: (I) increase sales 12%; (II) decrease costs $433,000; (III) decrease average operating assets $518,000. Compute the expected return on investment (ROI) for each center. Assume center I has a controllable margin percentage of 70%. (Round ROI to 1 decimal place, e.g. 1.5%.)
I | II | III | ||||
The expected return on investment | % | % | % |
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