If the company pursues the investment opportunity and otherwise performs the same as last year, the combined ROI for the entire company will be closest to:

A) 12.0%
B) 8.6%
C) 10.4%
D) 1.7%

To calculate the new combined ROI for the entire company, we need to add the ROI for the new investment opportunity to the ROI for last year and divide the sum by the total assets.

ROI for last year = ($4,000,000 - $3,200,000) / $3,200,000 = 25%

ROI for the investment opportunity = ($240,000 - $200,000) / $200,000 = 20%

Weighted average ROI = [(25% x $3,200,000) + (20% x $200,000)] / ($3,200,000 + $200,000) = 10.4%

Therefore, the closest combined ROI for the entire company is 10.4%, which is option C.

Net operating income = $700,000 + $138,600 = $838,600
Average operating assets = $7,000,000 + $1,100,000 = $8,100,000
ROI = Net operating income ÷ Average operating assets = $838,600 ÷ $8,100,000 = 10.4%
Reference: CH10-Ref10
The Tipton Division of Dudley Company reported the following data last year: