The West Division of Cecchetti Corporation had average operating assets of $693,000 and net operating income of $102,500 in August. The minimum required rate of return for performance evaluation purposes is 16%.What was the West Division's minimum required return in August?
A) $102,500
B) $110,880
C) $16,400
D) $127,280

Question

Quizplus · Accepted Answer

The minimum required return for performance evaluation purposes can be calculated by multiplying the average operating assets by the minimum required rate of return. 
Minimum required return = $693,000 x 16% = $110,880
Therefore, the West Division's minimum required return in August was $110,880. Option B is the correct answer.

The West Division of Cecchetti Corporation Had Average Operating Assets