Multiple Choice
The manager of the Beach Division of Treat Time is evaluating the acquisition of a new mobile ice cream server.The budgeted operating income of the Beach Division is currently $2,940,000 with total assets of $28,600,000 and noninterest-bearing current liabilities of $600,000.The proposed investment would add $18,000 to operating income and would require an additional investment of $120,000.The targeted rate of return for the Beach Division is 9 percent.Ignoring taxes, how much is the return on investment of the Beach Division if the ice cream server is not purchased?
A) 15.0%
B) 10.5%
C) 10.2%
D) 9.73%
Correct Answer:
Verified
Correct Answer:
Verified
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