Parsa Incorporated reported the following results from last year's operations: At the beginning of this year, the company has a $1,100,000 investment opportunity with the following characteristics:
Last year's return on investment (ROI) was closest to:
A) 10.0%
B) 5.0%
C) 50.0%
D) 64.3%

Question

Parsa Incorporated reported the following results from last year's operations:  At the beginning of this year, the company has a $1,100,000 investment opportunity with the following characteristics:
 Last year's return on investment (ROI) was closest to:
A) 10.0% 
B) 5.0% 
C) 50.0% 
D) 64.3%

Quizplus · Accepted Answer

To calculate the ROI, we need to divide the net income by the total assets. From the information given, we can calculate the net income as $350,000 ($950,000 - $600,000) and the total assets as $4,250,000 ($2,500,000 + $1,000,000 + $750,000). Therefore, the ROI is:
ROI = ($350,000 / $4,250,000) x 100% = 8.24%
Since the answer choices are not very close to each other, we can estimate and choose the closest one, which is answer choice A) 10.0%.

Parsa Incorporated Reported the Following Results from Last Year's Operations