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Compute the return on investment for each division

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Reference no: EM13513003

Consider the following sales and operating data for the three divisions of a conglomerate:

Division A

Division C

Division C

Sales

$140,000

$180,000

$250,000

Operating income

$ 5,000

$ 6,300

$ 14,400

Operating assets

$ 20,000

$ 35,000

$ 90,000

Minimum required rate of return

10%

19%

20%

(a) Compute the return on investment (ROI) for each division.

(b) Assume that each division is provided with an investment opportunity that could produce 20 percent return on investment. Which divisions would accept or reject it?

 

Reference no: EM13513003

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