The following information pertains to Quest Co.'s Gold Division for the current year: (CPA adapted) Quest's return on investment was:
A)10.00%.
B)13.33%.
C)27.50%.
D)30.00%.

Question

The following information pertains to Quest Co.'s Gold Division for the current year: (CPA adapted)  Quest's return on investment was:
A)10.00%. 
B)13.33%. 
C)27.50%. 
D)30.00%.

Quizplus · Accepted Answer

To calculate the return on investment, we need to divide operating income by invested capital. In this case, operating income is $275,000 and invested capital is $1,000,000, so the return on investment is 27.50% (275,000/1,000,000 x 100). Therefore, the best choice is C.

The Following Information Pertains to Quest Co