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The R&B Division of MoTown Recording Corporation defines return as after-tax income and had the following results last year. Sales $10,000,000 Operating income $ 2,200,000 Average total invested capital $4,000,000 Current liabilities $ 2,500,000 Management's target rate of return is 12% and the weighted average cost of capital is 9%. Its effective tax rate is 40%. Calculate the return on investment (ROI).

The R&B Division of MoTown Recording Corporation defines return as after-tax income and had the following results last year. Sales $10,000,000 Operating income $ 2,200,000 Average total invested capital $4,000,000 Current liabilities $ 2,500,000 Management's target rate of return is 12% and the weighted average cost of capital is 9%. Its effective tax rate is 40%. Calculate the return on investment (ROI).

FINANCIAL ACCOUNTING
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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The R&B Division of MoTown Recording Corporation defines return as after-tax income and had the following results last year.

Sales

$10,000,000

Operating income

$ 2,200,000

Average total invested capital

$4,000,000

Current liabilities

$ 2,500,000

Management's target rate of return is 12% and the weighted average cost of capital is 9%. Its effective tax rate is 40%.

Calculate the return on investment (ROI). 

IMPORTANT: Provide your answer in the following format: 0.## (Your answer must be in decimal format).


 

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