Question
Standard Media has a required rate of return of 5 percent, a cost of capital of 4 percent, and an income tax rate of 30
Standard Media has a required rate of return of 5 percent, a cost of capital of 4 percent, and an income tax rate of 30 percent. The following information about its two divisions has been provided by management:
| Audio Division | Video Division | |||
| NOPAT | $1,400,000 | $2,000,000 | ||
| Sales | $10,000,000 | $12,500,000 | ||
| Invested capital | $15,000,000 | $17,500,000 |
How much is the ROI of the Audio Division?
|
| 9.33% |
|
| 66.67% |
|
| 14.00% |
|
| 16.00% |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Study Guide/Workbook For Use With Introduction To Managerial Accounting
Authors: Peter Brewer, Ray Garrison, Eric Noreen
3rd Edition
0072835249, 978-0072835243
