Division 3 of Baritune Enterprises reported sales of $820,000, NOPAT totaling $61,500, interest expense of $8,000, and invested capital totaling $512,500.Its income tax rate is 30 percent.As it pertains to evaluating investment centers, how much is Division 3's profit margin?
A)12.0%
B)7.5%
C)8.2%
D)1.6%

Question

Quizplus · Accepted Answer

The profit margin is calculated as NOPAT divided by sales. For Division 3, NOPAT is $61,500 and sales are $820,000. Therefore, the profit margin is $61,500 / $820,000 = 0.075, or 7.5%.

Division 3 of Baritune Enterprises Reported Sales of $820,000, NOPAT