Multiple Choice
Rob Haughton is the North Division manager and his performance is evaluated by executive management based on Division ROI. The current controllable margin for North Division is $46,000. Its current operating assets total $210,000. The division is considering purchasing equipment for $40,000 that will increase sales by an estimated $10,000, with annual depreciation of $10,000. If the equipment is purchased, what will happen to the return on investment for the division?
A) An increase of 0.5%
B) A decrease of 0.5%
C) A decrease of 3.5%
D) It will remain unchanged.
Correct Answer:
Verified
Correct Answer:
Verified
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