The New Products Division of Testar Company Had Operating Income

Multiple Choice

The New Products Division of Testar Company had operating income of $8,000,000 and operating assets of $44,800,000 during the current year.The New Products Division has developed a potential new product that would require $8,500,000 in operating assets and would be expected to provide $1,400,000 in operating income each year.Testar has set a target return on investment (ROI) of 16% for each of its divisions.Assuming that the new product is put into production,calculate the division's ROI.

A) 17.60%
B) 17.90%
C) 16.50%
D) The answer cannot be determined using the information provided.