Answer the following questions using the information below:
Thornton Company has invested $2,000,000 in a plant to make commercial juicer machines. The target operating income desired from the plant is $360,000 annually. The company plans annual sales of 7,000 juicer machines at a selling price of $400 each.
-What is the target rate of return on investment for Thornton Company?
A)22.0%
B)18.0%
C)14.8%
D)12.9%

Question

Quizplus · Accepted Answer

The target rate of return on investment is calculated by dividing the target operating income by the investment. Here, $360,000 / $2,000,000 = 0.18 or 18.0%.

Answer the Following Questions Using the Information Below