Average operating assets are $110,000 and net operating income is $20,000. The c

Question

Average operating assets are $110,000 and net operating income is $20,000. The company invests $25,000 in new assets for a project that will increase net operating income by $3,750. What Is the return on investment (ROI) of the new project? (Calculate ROI based on Net Operating Income and Ignore Tax.)

A. 18.18%

B. 21.59%

C. 15%

D. 18.75%

Average operating assets are $110,000 and net operating income is $20,000. The company invests $25,000 in new assets for a project that will increase net operating income by $3,750. What Is the return on investment (ROI) of the new project? (Calculate ROI based on Net Operating Income and Ignore Tax.)

A. 18.18%

B. 21.59%

C. 15%

D. 18.75%

Explanation / Answer

ROI= Net Operating Income/Average operating Assets *100

ROI for a new project= Net operating Income/Operating assets*100= $3750/25000*100= 15% Ans C

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