An investment center manager is considering three possible investments. The company’s required return is 10%. The required asset investment, controllable margins, and the ROIs of each investment are as follows: Project Average Investment Controllable Margin AA $170,000 $44,960 BB 150,000 29,240 CC 230,000 79,640 The investment center is currently generating an ROI of 23% based on $1,210,000 in operating assets and a controllable margin of $289,000. If the manager can select only one project, determine which is the best choice to increase the investment center’s ROI by computing the investment center’s ROI for each of the investment alternatives. (Round answer to 1 decimal place, e.g. 52.5.)

An investment center manager is considering three possible investments. The company’s required return is 10%. The required asset investment, controllable margins, and the ROIs of each investment are as follows: Project Average Investment Controllable Margin AA $170,000 $44,960 BB 150,000 29,240 CC 230,000 79,640 The investment center is currently generating an ROI of 23% based on $1,210,000 in operating assets and a controllable margin of $289,000. If the manager can select only one project, determine which is the best choice to increase the investment center’s ROI by computing the investment center’s ROI for each of the investment alternatives. (Round answer to 1 decimal place, e.g. 52.5.)

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 4P

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An investment-center manager is considering three possible investments. The company's required return is 10%. The required asset investment, controllable margins, and the ROIs of each investment are as follows: Project Average Investment Controllable Margin AA BB CC $175,000 155,000 235,000 $51,110 35,170 84,900 The investment center is currently generating an ROI of 23% based on $1,215,000 in operating assets and a controllable margin of $295,000 If the manager can select only one project, determine which is the best choice to increase the investment center's ROI by computing the investment center's ROI for each of the investment alternatives. (Round answer to 1 decimal place, e.g. 52.5.) CC is the best choice and ROI will be 36.2 %.
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