Beta Division had the following information: $$\begin{array} { l r }
\text { Asset base in Beta Division } & \$ 400,000 \
\text { Net income in Beta Division } & \$ 50,000 \
\text { Weighted average cost of capital } & 12 \% \
\text { Target RoI } & 15 \% \
\text { Margin for Beta Division } & 20 \%
\end{array}$$ If the asset base is decreased by $100,000,with no other changes,what will be the return on investment of Beta Division?
A)16.7%
B)62.5%
C)100.0%
D)600.0%

Question

Beta Division had the following information: $$\begin{array} { l r } 
\text { Asset base in Beta Division } & \$ 400,000 \
\text { Net income in Beta Division } & \$ 50,000 \
\text { Weighted average cost of capital } & 12 \% \
\text { Target RoI } & 15 \% \
\text { Margin for Beta Division } & 20 \%
\end{array}$$ If the asset base is decreased by $100,000,with no other changes,what will be the return on investment of Beta Division?
A)16.7%
B)62.5%
C)100.0%
D)600.0%

Quizplus · Accepted Answer

The original asset base is $400,000, and it's decreased by $100,000, making the new asset base $300,000. The net income remains $50,000. The return on investment (ROI) is calculated as (Net Income / Asset Base) * 100. So, the new ROI is ($50,000 / $300,000) * 100 = 16.7%.

Beta Division Had the Following Information If the Asset Base Is Decreased by $100,000,with No Other