Merck Pharmaceuticals is evaluating its Vioxx division, an investment centre.The division has a $45,000 controllable margin and $300,000 of sales.How much will Merck's average operating assets be when its return on investment is 10%?

Question

Quizplus · Accepted Answer

The return on investment (ROI) is calculated as the Controllable Margin divided by the Average Operating Assets. Given a controllable margin of $45,000 and an ROI of 10%, we can set up the equation: $45,000 / Average Operating Assets = 10%. Solving for Average Operating Assets gives us $450,000.

Merck Pharmaceuticals Is Evaluating Its Vioxx Division, an Investment Centre