Cleary Ceramics, a division of Sweeney Corporation, has an operating income of $66,000 and total assets of $440,000. The required rate of return for the company is 10%. The company is evaluating whether it should use return on investment (ROI) or residual income (RI) as a measurement of performance for its division managers. The manager of Cleary Ceramics has the opportunity to undertake a new project that will require an investment of $160,000. This investment would earn $19,200 for the company.
What is the original return on investment (ROI) for Cleary Ceramics (before making any additional investment)?
