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) 14.4%
B) 2.7%
C) 11.7%
D) 18.8%

To calculate the combined ROI for the entire company, we need to use the formula:

Combined ROI = (Total Net Income / Total Investment) x 100

Last year, the company had a net income of $1,080,000 and an investment of $9,000,000, so the ROI was:

ROI = (1,080,000 / 9,000,000) x 100 = 12%

If the company pursues the investment opportunity, they will have an additional net income of $360,000 and an additional investment of $2,500,000. So, the total net income and total investment will be:

Total Net Income = 1,080,000 + 360,000 = 1,440,000
Total Investment = 9,000,000 + 2,500,000 = 11,500,000

Using the formula, the combined ROI will be:

Combined ROI = (1,440,000 / 11,500,000) x 100 = 12.52%

Therefore, the closest answer is A) 14.4%.

Net operating income = $456,000 + $107,100 = $563,100
Average operating assets = $3,000,000 + $900,000 = $3,900,000
ROI = Net operating income ÷ Average operating assets = $563,100 ÷ $3,900,000 = 14.4%
Reference: CH10-Ref5
Weafer Inc.reported the following results from last year's operations: