Grady Corporation provides the following financial information: $$\begin{array} { | l | r | }
\hline \text { Minimum acceptable operating income } & \$ 520,000 \
\hline \text { Average total assets } & \$ 2,600,000 \
\hline \text { Operating income } & \$ 700,000 \
\hline \text { Return on investment } & 26.92 \% \
\hline \text { Net sales } & \$ 850,000 \
\hline
\end{array}$$ Calculate the target rate of return.(Round your answer to two decimal places.)
A) 20.00%
B) 82.35%
C) 26.92%
D) 61.18%

Question

Grady Corporation provides the following financial information: $$\begin{array} { | l | r | } 
\hline \text { Minimum acceptable operating income } & \$ 520,000 \
\hline \text { Average total assets } & \$ 2,600,000 \
\hline \text { Operating income } & \$ 700,000 \
\hline \text { Return on investment } & 26.92 \% \
\hline \text { Net sales } & \$ 850,000 \
\hline
\end{array}$$ Calculate the target rate of return.(Round your answer to two decimal places.)
A) 20.00%
B) 82.35%
C) 26.92%
D) 61.18%

Quizplus · Accepted Answer

The target rate of return is calculated as the Minimum acceptable operating income divided by the Average total assets. Thus, $520,000 / $2,600,000 = 0.2 or 20.00%.

Grady Corporation Provides the Following Financial Information Calculate the Target Rate of Return