Correll Company has two divisions,A and B.Information for each division is as follows: $\begin{array}{lcc}
& \underline{\text { A}}& \underline{\text { B}}\
\text { Net earnings for division } & \$ 40,000 & \$ 260,000 \
\text { Asset base for division } & \$ 100,000 & \$ 1,200,000 \
\text { Target rate of return } & 15 \% & 18 \% \
\text { Margin } & 10 \% & 20 \% \
\text { Weighted average cost of capital } & 12 \% & 12 \%
\end{array}$ What is the return on investment for A?
A)15%
B)18%
C)20%
D)40%

Question

Quizplus · Accepted Answer

The return on investment (ROI) for Division A is calculated as Net Earnings divided by Asset Base. For Division A, this is $40,000 / $100,000 = 0.4 or 40%.

Correll Company Has Two Divisions,A and B What Is the Return on Investment for A? A)15% B)18

Correll Company Has Two Divisions,A and B What Is the Return on Investment for A?
A)15%
B)18