Solister, Inc., had the following information: $$\begin{array} { l r }
\text { Asset base in Solister, Inc. } & \$ 625,500 \
\text { Net income in Solister, Inc. } & \$ 75,950 \
\text { Weighted average cost of capital } & 12 \% \
\text { Target return on investment (ROI) } & 15 \% \
\text { Margin for Solister, Inc. } & 20 \%
\end{array}$$ If the asset base is decreased by $185,450, with no other changes, what will the return on investment of Solister, Inc. be? (Round the answer to two decimal places.)
A)5.79%
B)12.50%
C)17.26%
D)30.00%

Question

Solister, Inc., had the following information: $$\begin{array} { l r } 
\text { Asset base in Solister, Inc. } & \$ 625,500 \
\text { Net income in Solister, Inc. } & \$ 75,950 \
\text { Weighted average cost of capital } & 12 \% \
\text { Target return on investment (ROI) } & 15 \% \
\text { Margin for Solister, Inc. } & 20 \%
\end{array}$$ If the asset base is decreased by $185,450, with no other changes, what will the return on investment of Solister, Inc. be? (Round the answer to two decimal places.)
A)5.79%
B)12.50%
C)17.26%
D)30.00%

Quizplus · Accepted Answer

The return on investment (ROI) can be calculated by dividing the net income by the new asset base (original asset base minus the decrease) and then multiplying by 100 to get a percentage. The original asset base is $625,500, and it is decreased by $185,450, resulting in a new asset base of $440,050. The net income remains at $75,950. Thus, the new ROI = ($75,950 / $440,050) * 100 = 17.26%.

Solister, Inc If the Asset Base Is Decreased by $185,450, with No