For its three investment centers, Grouper Company accumulates the following data: Sales Controllable margin Average operating assets I $1,840,000 1,242,000 4,600,000 The expected return on investment 11 $3,680,000 1,766,400 7,408,000 III $3,680,000 27 3,229,360 The company expects the following changes for investment centers I, II, and III in the next year: investment center I to increase sales 15%, investment center II to decrease controllable fixed costs $456,000, and investment center III to decrease average operating assets $472,000. 9,200,000 Compute the expected return on investment (ROI) for each center. Assume investment center I has a contribution margin percentage of 68% (Round ROI to 1 decimal place, e.g. 1.5%) 24 5 111

For its three investment centers, Grouper Company accumulates the following data: Sales Controllable margin Average operating assets I $1,840,000 1,242,000 4,600,000 The expected return on investment 11 $3,680,000 1,766,400 7,408,000 III $3,680,000 27 3,229,360 The company expects the following changes for investment centers I, II, and III in the next year: investment center I to increase sales 15%, investment center II to decrease controllable fixed costs $456,000, and investment center III to decrease average operating assets $472,000. 9,200,000 Compute the expected return on investment (ROI) for each center. Assume investment center I has a contribution margin percentage of 68% (Round ROI to 1 decimal place, e.g. 1.5%) 24 5 111

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter8: Basic Stock Valuation

Section: Chapter Questions

Problem 9MC

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