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Preston Ceramics, a division of LaChut Corporation, has an operating income of $85,000 and total assets of $425,000. The required rate of return for the
Preston Ceramics, a division of LaChut Corporation, has an operating income of $85,000 and total assets of $425,000. The required rate of return for the company is 13%. The company is evaluating whether it should use return on investment (ROI) or residual income (RI) as a measurement of performance for its division managers. The manager of Preston Ceramics has the opportunity to undertake a new project that will require an investment of $175,000. This investment would earn $24,500 for the company. Read the requirements Requirement 1. What is the original return on investment (ROI) for Preston Ceramics (before making any additional investment)? First determine the formula to calculate the ROI. Operating income Total assets = ROI (Enter the percentage to two decimal places.) The original return on investment (ROI) for Preston Ceramics is % Enter any number in the edit fields and then click Check Answer. 11 parts Il remaining Clear All Check
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