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Belsky Bay Inc. has two divisions. The company, in trying to develop performance measures has noted that different accounting methods and inflation rates exist for the assets of the divisions. Because of the difference, the company is considering the use of multiple performance measures. The following information for the divisions for last year is below:

The company's required rate of return is 12 percent.
-What are Division A and B's ROIs based on gross book values, respectively (round to two decimals)?
A) 64.65%; 23.23%
B) 48.55%; 41.74%
C) 41.74%; 48.55%
D) 23.65%; 65.00%

Question

Use the following to answer questions:
Belsky Bay Inc. has two divisions. The company, in trying to develop performance measures has noted that different accounting methods and inflation rates exist for the assets of the divisions. Because of the difference, the company is considering the use of multiple performance measures. The following information for the divisions for last year is below:
  
The company's required rate of return is 12 percent.
-What are Division A and B's ROIs based on gross book values, respectively (round to two decimals)?
A) 64.65%; 23.23% 
B) 48.55%; 41.74% 
C) 41.74%; 48.55% 
D) 23.65%; 65.00%

Quizplus · Accepted Answer

The ROI (Return on Investment) is calculated by dividing the net income by the gross book value. Based on the given options, the correct ROIs for Division A and B are 48.55% and 41.74%, respectively.

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