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Find what will happen to return on investment for division

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Reference no: EM132974432

Problem 1: Betsy Union is the Sheffield Corp. manager and her performance is evaluated by executive management based on Division ROI. The current controllable margin for Sheffield Corp. is 32000. Its current operating assets total $210000. The division is considering purchasing equipment for $40000 that will increase sales by an estimated $10000, with annual depreciation of $10000. If the equipment is purchased, what will happen to the return on investment for the division?

Option 1: A decrease of 2.4%
Option 2: An increase of 1.6%
Option 3: A decrease of 1.6%
Option 4: It will remain unchanged

Reference no: EM132974432

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