Question
For its three investment centers, Gerrard Company accumulates the following data: I II III Sales $1,980,000 $3,997,000 $3,946,000 Controllable margin 1,386,000 1,998,500 3,551,400 Average operating
For its three investment centers, Gerrard Company accumulates the following data: I II III Sales $1,980,000 $3,997,000 $3,946,000 Controllable margin 1,386,000 1,998,500 3,551,400 Average operating assets 4,977,000 7,962,000 12,190,000 The centers expect the following changes in the next year: (I) increase sales 20%; (II) decrease costs $352,000; (III) decrease average operating assets $495,000. 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%.)
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