&Great; decide which outlet of two alternatives to open. The first location (A)

Question

&Great; decide which outlet of two alternatives to open. The first location (A) requires a $500,000 investment and is expected to yield annual erepare a re et inccme of $75,000. The second location (B) requires a $200,000 investment and is expected to yield annual net income of S42,000. Compute the return on investment for each Fast & Great Burgers alternative. ROI ROI Location A Location B Using return on investment as your orly criterion, recommend which of the locations to open Location A Location B

Explanation / Answer

Net income/Average invested assets = ROI Location A 75000/500000= 15% Location B 42000/200000= 21% Location B should be open

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