The Riggs Company manufactures monogrammed t-shirts that are sold online. The manager of one of the business units would like to consider replacing their current embroidery machine and has a choice between buying either (a) a brand new one for $12,840 or (b) a refurbished model for $9,703. The new machine will incur $4,906 of expenses, and the refurbished machine will incur $4,677 of expenses. Both machines will have a Return on Investment (ROI) of 9%. How much Sales will the new machine generate? (Do not round calculations.)
A) $1,155.60
B) $5,550.27
C) $5,832.60
D) $6,061.60

Question

Quizplus · Accepted Answer

This formula requires knowledge of the formula for ROI: Operating Income/Investment. To begin, plug-in the information provided: 0.09 = (X - $4,906)/$12,840. Now, solve for X: $1,155.60 = X - $4,906, so X = $6,061.60. The new machine will generate $6,061.60 of Sales (Choice D).

The Riggs Company Manufactures Monogrammed T-Shirts That Are Sold Online