Pirate Enterprises has operating income of $66,500. Its return on investment (ROI)is 35%, while its target rate of return is 25%. The total assets of Pirate Enterprises may be closest to
A)$23,275.
B)$266,000.
C)$190,000.
D)$66,500.

Question

Quizplus · Accepted Answer

ROI = Operating Income / Total Assets
35% = 66,500 / Total Assets
Total Assets = $190,000

To calculate the target rate of return, we can use the following formula:
Target Rate of Return = Operating Income / Target ROI
Target Rate of Return = 66,500 / 0.25 = $266,000

However, the question is asking for the total assets, which is closest to $190,000.

Pirate Enterprises Has Operating Income of $66,500