Assume the Air Conditioning division of the General Appliance Corporation had the following results last year (in thousands).Management's target rate of return is 15% and the weighted average cost of capital is 10%.Its effective tax rate is 35%.

What is the division's Return on Investment (ROI)?
A)400.00%
B)20.00%
C)80.00%
D)32.80%

Question

Assume the Air Conditioning division of the General Appliance Corporation had the following results last year (in thousands) .Management's target rate of return is 15% and the weighted average cost of capital is 10%.Its effective tax rate is 35%.

What is the division's Return on Investment (ROI) ?

What is the division's Return on Investment (ROI)?
A)400.00% 
B)20.00% 
C)80.00% 
D)32.80%

Quizplus · Accepted Answer

C)Operating income 2,000,000/Total assets 2,500,000 = 80%

Assume the Air Conditioning Division of the General Appliance Corporation