South Division of Renato Enterprises reported net income of $480,000 in March on sales of $7,900,000.If this division has no interest expense, an income tax rate of 30 percent, and reported a return on investment of 12 percent, how much is invested capital?
A)$948,000
B)$4,000,000
C)$2,800,000
D)More information is needed to determine the answer.

Question

Quizplus · Accepted Answer

The return on investment (ROI) formula is ROI = Net Income / Invested Capital. Given a net income of $480,000 and an ROI of 12%, we can rearrange the formula to solve for Invested Capital: Invested Capital = Net Income / ROI = $480,000 / 0.12 = $4,000,000.

South Division of Renato Enterprises Reported Net Income of $480,000