Barrera Corporation provides the following financial information: $$\begin{array} { | l | r | }
\hline \text { Minimum acceptable operating income } & \$ 556,600 \
\hline \text { Average total assets } & \$ 2,000,000 \
\hline \text { Operating income } & \$ 708,000 \
\hline \text { Return on investment } & 35.40 \% \
\hline \text { Net sales } & \$ 900,000 \
\hline
\end{array}$$ Calculate the target rate of return. (Round your answer to two decimal places.)
A) 27.83%
B) 78.67%
C) 35.40%
D) 61.84%

Question

Barrera Corporation provides the following financial information: $$\begin{array} { | l | r | } 
\hline \text { Minimum acceptable operating income } & \$ 556,600 \
\hline \text { Average total assets } & \$ 2,000,000 \
\hline \text { Operating income } & \$ 708,000 \
\hline \text { Return on investment } & 35.40 \% \
\hline \text { Net sales } & \$ 900,000 \
\hline
\end{array}$$ Calculate the target rate of return. (Round your answer to two decimal places.)
A) 27.83%
B) 78.67%
C) 35.40%
D) 61.84%

Quizplus · Accepted Answer

The target rate of return is calculated by dividing the minimum acceptable operating income by the average total assets. Thus, $ \frac{\$556,600}{\$2,000,000} = 0.2783 $ or 27.83%.

Barrera Corporation Provides the Following Financial Information Calculate the Target Rate of Return