Question
The current profit for a subunit is $36,000. Its current invested capital is $200,000. The subunit is considering purchasing for $20,000 equipment that will increase
The current profit for a subunit is $36,000. Its current invested capital is $200,000. The subunit is considering purchasing for $20,000 equipment that will increase annual profit by an estimated $2,800. The firm's cost of capital is 12%. If the equipment is purchased, what will be the increase in residual income of the subunit?
Select one:
a. 4%
b. $400
c. $16,000
d. $2,800
The current income for a subunit is $36,000 on sales revenues of $360,000. Its current invested capital is $200,000. The subunit's invested capital will be reduced $20,000, and the reduction will not change the subunits' income or sales revenues. If the reduction in invested capital occurs, what will be the new return on investment (ROI) for the subunit?
Select one:
a. 16%
b. 20%
c. 22%
d. 19.08%
The current income of the subunit is $42,000. Its current invested capital is $280,000. If the sales margin is increased to 8% and the capital turnover remains constant at 3, what will be the subunit's new return on investment (ROI)?
Select one:
a. 45%
b. 24%
c. 21%
d. 15%
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