How many units must the South Division sell each year to have an ROI of 16%?

Question

Quizplus · Accepted Answer

To calculate the number of units needed to sell each year to achieve an ROI of 16%, we need to use the ROI formula, which is: ROI = (Net Income / Total Investment) x 100. We can rearrange the formula to solve for the total investment, which is: Total Investment = Net Income / (ROI / 100). 
Using the figures given in the question, we can calculate the total investment of the South Division as: 
Total Investment = $390,000 / (16 / 100) = $2,437,500. 
To find the number of units required to sell, we need to divide the total investment by the unit cost, which is $37.50 per unit: 
Number of Units = Total Investment / Unit Cost = $2,437,500 / $37.50 = 65,000 units. 
So, the answer is B: 65,000.

How Many Units Must the South Division Sell Each Year