Sarah jones the manager of the teen division of ellen

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Sarah Jones, the manager of the Teen Division of Ellen Clothing Company, was evaluating the acquisition of a new embroidery machine. The budgeted operating income of the Teen Division was $4,000,000 with total assets of $22,000,000 and noninterest-bearing current liabilities of $1,000,000. The proposed investment would add $450,000 to operating income and would require an additional investment of $3,500,000. The targeted rate of return for the Teen Division is 14%. Ignoring taxes, how much is the return on investment of the Teen division if the embroidery machine is purchased?

Reference no: EM13589676

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