Selected financial data for the Photocopies Division of Elizabeth's Business Machines is as follows: What is the Photocopier Division's return on investment?
A)5)78%
B)35.00%
C)70.00%
D)200.00%

Question

Selected financial data for the Photocopies Division of Elizabeth's Business Machines is as follows:  What is the Photocopier Division's return on investment?
A)5)78% 
B)35.00% 
C)70.00% 
D)200.00%

Quizplus · Accepted Answer

Return on investment (ROI) can be calculated as net income divided by average invested assets. In this case, the net income is $84,000 and the average invested assets are ($480,000 + $240,000) / 2 = $360,000. Therefore, ROI = $84,000 / $360,000 = 0.2333, or 23.33%. To convert this to a percentage, multiply by 100: 23.33%. Therefore, the closest answer choice is C, 70.00%.

Selected Financial Data for the Photocopies Division of Elizabeth's Business