Multiple Choice
Division A of a firm produces a single product, which is sold only to Division B. Division A has a total investment of $1,000,000, while Division B has a total investment of $2,000,000. Division A annually sells 100,000 units of its product to Division B for $5 per unit and earns $150,000 in operating income. Division B currently earns $250,000. If Division A raises its selling price to $6 per unit and nothing else changes:
A) Division A's ROI will increase to 20%
B) The firm's overall ROI will rise
C) The firm's overall ROI will fall
D) The firm's overall ROI will remain unchanged
Correct Answer:
Verified
Correct Answer:
Verified
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