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For its three investment centers, Gerrard Company accumulates the following data: I II III Sales $1,900,000 $4,075,000 $4,069,000 Controllable margin 1,330,000 2,037,500 3,662,100 Average operating
For its three investment centers, Gerrard Company accumulates the following data:
I | II | III | ||||
Sales | $1,900,000 | $4,075,000 | $4,069,000 | |||
Controllable margin | 1,330,000 | 2,037,500 | 3,662,100 | |||
Average operating assets | 5,068,000 | 7,993,000 | 12,028,000 |
The centers expect the following changes in the next year: (I) increase sales 14%; (II) decrease costs $376,000; (III) decrease average operating assets $491,000. Compute the expected return on investment (ROI) for each center. Assume center I has a controllable margin percentage of 70%.
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