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For its three investment centers, Gerrard Company accumulates the following data: I II III Sales $1,930,000 $3,924,000 $3,971,000 Controllable margin 1,351,000 1,962,000 3,573,900 Average operating assets 5,068,000 8,072,000 12,049,000 The centers expect the following changes in the next year: (I) increase sales 10%; (II) decrease costs $383,000; (III) decrease average operating assets $474,000. Compute the expected return on investment (ROI) for each center. Assume center I has a controllable margin percentage of 70%.
For its three investment centers, Gerrard Company accumulates the following data: I II III Sales $1,930,000 $3,924,000 $3,971,000 Controllable margin 1,351,000 1,962,000 3,573,900 Average operating assets 5,068,000 8,072,000 12,049,000 The centers expect the following changes in the next year: (I) increase sales 10%; (II) decrease costs $383,000; (III) decrease average operating assets $474,000. Compute the expected return on investment (ROI) for each center. Assume center I has a controllable margin percentage of 70%.
Answer:Investment centers 1 29.32%Investment centers 2 29.05%Investment centers 3 30.88%Explanation:The solution is attached in the picture below...
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