Alpha Company has shown the following financial information: Sales: $4,500,000, Total assets: $1,800,000 Cost of capital: 15% Residual income: $90,000 The company’s return on investment is: A. 15% B. 18% C. 10% D. 12% E. 20%

Alpha Company has shown the following financial information: Sales: $4,500,000, Total assets: $1,800,000 Cost of capital: 15% Residual income: $90,000 The company’s return on investment is: A. 15% B. 18% C. 10% D. 12% E. 20%

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

QUESTION 24

Alpha Company has shown the following financial information:

Sales: $4,500,000,

Total assets: $1,800,000

Cost of capital: 15%

Residual income: $90,000

The company’s return on investment is:

A.

15%

B.

18%

C.

10%

D.

12%

E.

20%

Formula Formula ROI (%) = Net Income Principal Amount × 100

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