The Jackson Division of Florida Motors Had an Operating Income

Multiple Choice

The Jackson Division of Florida Motors had an operating income of $335,000 and net assets of $1,340,000. Florida Motors has a target rate of return of 12 percent. The Jackson Division has an opportunity to increase operating income by $50,000 if a $200,000 investment in assets is made.
What will Jackson's ROI and Residual Income be if the project is undertaken?

A) ROI 12 percent, Residual Income $ 50,000
B) ROI 27 percent, Residual Income $ 198,000
C) ROI 26 percent, Residual Income $ 200,000
D) ROI 25 percent, Residual Income $ 200,200