Question

Two investment centers at Marshman Corporation have the following current-year income and asset data:

Investment Center A Investment Center B
Investment center income $540,000 $650,000
Investment center average invested assets $4,900,000 $3,200,000
The return on investment (ROI) for Investment Center A is:

A. 828.30%
B. 29.10%
C. 11.02%
D. 49.20
E. 24.10

Answer 1

Answer:

11.02%

Explanation:

ROI=Net profit on investment/total investment engaged =$540,000/$4,900,000=11.02%

As the invested assets are $4,900,000 and amount earned on such assets is $540,000, therefore we can easily worked out returned earned on investment center A.

Answer 2

Answer:

Option C is correct

ROI = 11.02%

Explanation:

Return on Investment is the proportion of operating assets that an investment centre earned as as net operating income.

It is calculated as follows

ROI = operating income/operating assets

ROI for Investment centre A

= (540,000/4,900,00) × 100

= 11.02%