Assume All About Shoes Corporation has a division manager that is considering in

Question

Assume All About Shoes Corporation has a division manager that is considering investing in the Hiking Shoes Project which had the following results last year (in thousands). Management's target rate of return is 20%. The division manager's current ROI before the investment is30% Sales Operating income Total assets Cn abilities $5,000,000 250,000 1,000,000 750,000 What is the the projects Return on Investment (ROI) and would the corporation's division manager accept or reject the project if the manager was evaluated using ROl OA. 5% and reject 0 B. 25% and accept C. 25% and reject 0 D. 100% and accept

Explanation / Answer

ROI = Operating income*100/total assets

        = 250000*100/1000000

ROI = 25%

so answer is b) 25% and accept

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