Question
Vaughan Company has 3 divisions with the following information: Division A Division B Division C Sales $750,000 $700,000 $360,000 Net Operating Income $20,000 $34,000 $36,000
Vaughan Company has 3 divisions with the following information:
Division A | Division B | Division C | |
Sales | $750,000 | $700,000 | $360,000 |
Net Operating Income | $20,000 | $34,000 | $36,000 |
Average Operating Assets | $200,000 | $500,000 | $300,000 |
Minimum Required Rate of Return | 12% | 6% | 11% |
Assume that each division was presented with an investment opportunity that would yield a rate of return of 11.2%. If performance is being measured by ROI a.both division A and B will accept the project, b.only division A will accept the project, c.only division C will accept the project, d.both division B and C will accept the project, e.all of the divisions will accept the project, f.none of the divisions will accept the project, g.only division B will accept the project because a.11.2% exceeds the current rate of return, b.11.2% is more than Vaughan company's total company rate of return, c.11.2% is less than Vaughan company's total company rate of return, d.11.2% exceeds their minimum required rate of return
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