The Current Controllable Margin for Frederick Division Is $62,000

The current controllable margin for Frederick Division is $62,000. Its current operating assets are $200,000. The division is considering purchasing equipment for $60,000 that will increase annual controllable margin by an estimated $10,000. If the equipment is purchased, what will happen to the return on investment for Frederick Division?

A) An increase of 16.1%
B) A decrease of 13.3%
C) A decrease of 3.3%
D) A decrease of 7.2%

Correct Answer:

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