Answer the following questions using the information below:
Crimpson Company has invested $2,000,000 in a plant to make commercial juicer machines. The target operating income desired from the plant is $299,000 annually. The company plans annual sales of 7,000 juicer machines at a selling price of $400 each.
-What is the target rate of return on investment for Crimpson Company?
A) 22.0%
B) 18.0%
C) 14.9%
D) 12.9%

Question

Quizplus · Accepted Answer

To calculate the target rate of return on investment, we need to use the following formula:
Target operating income / Total investment = Target rate of return on investment
Plugging in the numbers, we get:
$299,000 / $2,000,000 = 0.1495 or 14.95%
Rounding up to the nearest tenth, we get the answer as 14.9%. Therefore, the correct choice is C.

Answer the Following Questions Using the Information Below