Question
The Jazz Division of Heights Recording Corporation reported the following results last year: Sales $10,000,000 Operating Income $2,200,000 Total Assets $4,000,000 Current Liabilities $2,500,000 Management's
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The Jazz Division of Heights Recording Corporation reported the following results last year:
| Sales | $10,000,000 |
| Operating Income | $2,200,000 |
| Total Assets | $4,000,000 |
| Current Liabilities | $2,500,000 |
Management's target rate of return is 12% and the weighted average cost of capital is 9%. Its effective tax rate is 32%. Calculate the ROI for the Jazz Division.
A.
22%
B.
12%
C.
88%
D.
55%
Did the Jazz Division earn or exceed the target rate of return?
A.
Yes
B.
No
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Managerial Accounting
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
13th Edition
978-0073379616, 73379611, 978-0697789938
