An investment center manager is considering three possible investments. The company’s required return is 10%. The required asset investment, controllable margins, and the ROIs of each investment are as follows: Project Average Investment Controllable Margin AA $170,000 $44,960 BB 150,000 29,240 CC 230,000 79,640 The investment center is currently generating an ROI of 23% based on $1,210,000 in operating assets and a controllable margin of $289,000. If the manager can select only one project, determine which is the best choice to increase the investment center’s ROI by computing the investment center’s ROI for each of the investment alternatives. (Round answer to 1 decimal place, e.g. 52.5.)
An investment center manager is considering three possible investments. The company’s required return is 10%. The required asset investment, controllable margins, and the ROIs of each investment are as follows: Project Average Investment Controllable Margin AA $170,000 $44,960 BB 150,000 29,240 CC 230,000 79,640 The investment center is currently generating an ROI of 23% based on $1,210,000 in operating assets and a controllable margin of $289,000. If the manager can select only one project, determine which is the best choice to increase the investment center’s ROI by computing the investment center’s ROI for each of the investment alternatives. (Round answer to 1 decimal place, e.g. 52.5.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
An investment center manager is considering three possible investments. The company’s required return is 10%. The required asset investment, controllable margins, and the ROIs of each investment are as follows:
|
Project
|
Average Investment
|
Controllable Margin
|
||||||||
|---|---|---|---|---|---|---|---|---|---|---|
|
AA
|
$170,000 | $44,960 | ||||||||
|
BB
|
150,000 | 29,240 | ||||||||
|
CC
|
230,000 | 79,640 |
The investment center is currently generating an ROI of 23% based on $1,210,000 in operating assets and a controllable margin of $289,000.
If the manager can select only one project, determine which is the best choice to increase the investment center’s ROI by computing the investment center’s ROI for each of the investment alternatives. (Round answer to 1 decimal place, e.g. 52.5.)
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education