XYZ INC has several divisions and the one managed by Dr. Donaldson has asset base of $4 million and earnings after taxes is $2 million. A new project would earn $2 million per year on an investment of $5 million. As a result, ROA of the division changed from:

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Initially, the ROA is calculated as earnings after taxes divided by the asset base, which is $2 million / $4 million = 50%. After the new project, the total earnings become $4 million ($2 million existing + $2 million new project) and the total asset base becomes $9 million ($4 million existing + $5 million new project). The new ROA is $4 million / $9 million = 44.44%, which rounds to 44%.

XYZ INC Has Several Divisions and the One Managed by Dr