Asked by Courtney Cridland on May 02, 2024
Verified
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: 
The investment center is currently generating an ROI of 23% based on $1200000 in operating assets and a controllable margin of $276000.
Instructions
If the manager can select only one project determine which one is the best choice to increase the investment center's ROI. Compute how much the investment center's ROI will be if the manager selects your recommendation.
Operating Assets
Assets used in the daily operations of a business to generate revenue, such as machinery, building, and equipment.
Investment Center
A business unit or department that is responsible for its own revenues, expenses, and investment in assets, with its performance measured by its return on investment.
Controllable Margin
The portion of profit or income directly influenced by the management decisions, typically excluding fixed costs.
- Determine and evaluate investment prospects using ROI along with other pertinent financial indicators.
- Ascertain and interpret the return on investment (ROI) amidst various commercial settings.
Verified Answer
CJ
Charlie JacksonMay 02, 2024
Final Answer :
CC is the best choice because it increases the ROI (30% is greater than 23%). 
Learning Objectives
- Determine and evaluate investment prospects using ROI along with other pertinent financial indicators.
- Ascertain and interpret the return on investment (ROI) amidst various commercial settings.