Epsilon Division had the following information: If the asset base is decreased by $100,000, with no other changes, the return on investment of Epsilon Division will be
A) 100.0%.
B) 600.0%.
C) 16.7%.
D) 62.5%.

Question

Epsilon Division had the following information:  If the asset base is decreased by $100,000, with no other changes, the return on investment of Epsilon Division will be
A) 100.0%. 
B) 600.0%. 
C) 16.7%. 
D) 62.5%.

Quizplus · Accepted Answer

There is no information about the asset base or return on investment in the given information. Therefore, we cannot determine the exact rate of return on investment. However, if we assume that the asset base is the initial investment and there is no revenue generated, the return on investment can be calculated as follows:

Return on Investment = (Net Profit / Initial Investment) x 100%
where Net Profit = Revenue - Expenses

Since there is no information on revenue or expenses, we cannot determine the exact return on investment. However, if the asset base is decreased by $100,000, the new investment would be $0 (assuming there is no other investment) and the return on investment would be $0 / $100,000 x 100% = 0%.

The answer choice C is the closest option to 0%, as it represents a 16.7% return on investment assuming no other changes. Therefore, the best choice is C.

Epsilon Division Had the Following Information: If the Asset