Reference no: EM132315926

Question

For its three investment centers, Gerrard Company accumulates the following data:

                                         I                        II                    III

Sales                              $1,980,000           $3,997,000         $3,946,000

Controllable margin            945,630                1,990,500            4,754,100

Average operating assets   4,977,000              7,962,000            12,190,000

The centers expect the following changes in the next year: (I) increase sales 20%; (II) decrease costs $352,000; (III) decrease average operating assets $495,000.

Compute the expected return on investment (ROI) for each center. Assume center I has a controllable margin percentage of 78%. (Round ROI to 1 decimal place, e.g. 1.5.)

                                                      I                 II                  III

The expected return on investment       %               %                  %