Sales and Average Operating Assets for Company P and Company

Sales and average operating assets for Company P and Company Q are given below:

$\begin{array}{lccc}& \underline { \text { Sales Average } } & \text { Operating Assets } \\\text { Company P } & \$ 20,000 & \$ 8,000 \\\text { Company Q } & \$ 50,000 & \$ 10,000\end{array}$

What is the margin that each company (Company P and Company Q,respectively) will have to earn in order to generate a return on investment of 20%?

A) 2.5% and 5%.
B) 8% and 4%.
C) 12% and 16%.
D) 50% and 100%.

Correct Answer:

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