Care Inc., has two divisions that operate independently of one another. The financial data for the year 2015 reported the following results:

The company's desired rate of return is 10%. Income is defined as operating income.
What are the respective return-on-investment ratios for the North and South Divisions?
A) 16.00% and 11.88%
B) 10.00% and 7.50%
C) 11.88% and 16.00%
D) 7.50% and 10.00%

Question

Care Inc., has two divisions that operate independently of one another. The financial data for the year 2015 reported the following results:

The company's desired rate of return is 10%. Income is defined as operating income.
What are the respective return-on-investment ratios for the North and South Divisions?
A) 16.00% and 11.88% 
B) 10.00% and 7.50% 
C) 11.88% and 16.00% 
D) 7.50% and 10.00%

Quizplus · Accepted Answer

North Division = $1,900,000 / $16,000,000 = 11.88%
South Division = $1,600,000 / $10,000,000 = 16.00%

Care Inc, Has Two Divisions That Operate Independently of One Another