Betsy Union is the Pika Division manager and her performance is evaluated by executive management based on Division ROI. The current controllable margin for Pika 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

Pika Division

Betsy Union

The return on investment will reduce from 21.9% to 18.4%.

Explanation:

a) Data and Calculations:

Current controllable margin = $46,000

Current operating assets = $210,000

Current return on investment = $46,000/$210,000 * 100 = 21.9%

Increase in sales as a result of the new equipment = $10,000

Increase in depreciation = $10,000

Operating assets after the purchase of the new equipment = $250,000 ($210,000 + $40,000)

Future controllable margin = $46,000 ($46,000 + $10,000 - $10,000)

Future return on investment = $46,000/$250,000 * 100

= 18.4%

c

explanation:

c because the item on a bank statement is also referred to as an account statement. in addition, it provides the beginning balance, ending balance, statement date, transaction date for each transaction, payee, customer name and address, statement period, the account holder's account number, and the bank's customer service number

the investment was $14,174.196

explanation:

a lump sum means that the father of the example made one deposit and leave it be.

we need to know the value of a capital that generated at 4.05% per year during 28 years the sum of $48,613.24

now clearing the formula to solve for capital we got:

and we reach the answer investment = $14,174.20