Soundgarden Company is a division of a major corporation. Last year the division

Question

Soundgarden Company is a division of a major corporation. Last year the division had total sales of $10,400,000, net operating income of $540,800, and average operating assets of $2,392,000. The company's minimum required rate of return is 16%.

32.5%

23.0%

22.6%

5.2%

Soundgarden Company is a division of a major corporation. Last year the division had total sales of $10,400,000, net operating income of $540,800, and average operating assets of $2,392,000. The company's minimum required rate of return is 16%.

Explanation / Answer

The division's return on investment (ROI) is closest to22.6%

Return on Investment = Net Operating Income / Average Operating Assets

= ( $5,40,800 / $23,92,000 ) x 100

= 22.60%

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