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Problem - You must prepare a return on investment analysis for the regional manager of Fast & Great Burgers. This growing chain is trying to decide which outlet of two alternatives to open. The first location (A) requires a $500,000 average investment and is expected to yield annual net income of $70,000. The second location (B) requires a $200,000 average investment and is expected to yield annual net income of $42,000.
Required -
Compute the return on investment for each Fast & Great Burgers alternative.
Using return on investment as your only criterion, recommend which of the locations to open.
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