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Vaughn Division's operating results include: controllable margin of $175000, sales totaling $1400000, and average operating assets of $700000. Vaughn is considering a project with sales
Vaughn Division's operating results include: controllable margin of $175000, sales totaling $1400000, and average operating assets of $700000. Vaughn is considering a project with sales of $100000, expenses of $89000, and an investment of average operating assets of $200000. Vaughn's required rate of return is 8%. Should Vaughn accept this project? No, ROI will decrease to 6%. No, the return is less than the required rate of 8%. Yes, ROI still exceeds the cost of capital. Yes, ROI will drop by 6.6% which is still above the minimum required rate of return
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