What is the return on investment

Reference no: EM13955902

Decision making with return on investment You are the controller of a chain of dry-cleaning establishments. You are computing the return on investment for each outlet.

Outlet A, located in a city core, reported a net profit of $130,000. The land on which Outlet Ais located was essentially rural when it was purchased for $100,000. Since then, the city has expanded, and the land is now located in the population center. Comparable undeveloped land in the immediate area of the outlet is worth $2,000,000. The net book value of the outlet building and equipment is $400,000. The replacement cost of the building and equipment is $1,200,000. If the outlet building, equipment, and land were sold as a going concern, the sale price would be $1,500,000. It would cost $250,000 to demolish the building and clear the property for commercial development.

Required

(a) What is the return on this investment?

(b) How would you decide whether this outlet should continue to be operated, sold as a going concern, or demolished and the land sold?

Reference no: EM13955902

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What is the return on investment : What is the return on this investment? How would you decide whether this outlet should continue to be operated, sold as a going concern, or demolished and the land sold?

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