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) 3.9%
B) 24.0%
C) 14.5%
D) 18.5%

To calculate the combined ROI, we need to calculate the ROI for each division and then add them up.

For Division A:
ROI = (Net Income/Total Investment) x 100%
Without the investment opportunity, Net Income = $500,000 and Total Investment = $5,000,000
ROI = (500,000/5,000,000) x 100% = 10%
With the investment opportunity, Net Income = $600,000 and Total Investment = $6,000,000
ROI = (600,000/6,000,000) x 100% = 10%

For Division B:
ROI = (Net Income/Total Investment) x 100%
Without the investment opportunity, Net Income = $200,000 and Total Investment = $2,000,000
ROI = (200,000/2,000,000) x 100% = 10%
With the investment opportunity, Net Income = $240,000 and Total Investment = $2,800,000
ROI = (240,000/2,800,000) x 100% = 8.57%

Combined ROI = ROI for Division A + ROI for Division B
Without the investment opportunity:
Combined ROI = 10% + 10% = 20%
With the investment opportunity:
Combined ROI = 10% + 8.57% = 18.57%

Therefore, the combined ROI for the entire company will be closest to 18.5%, which is answer choice D.

Net operating income = $567,000 + $153,000 = $720,000
Average operating assets = $3,000,000 + $900,000 = $3,900,000
ROI = Net operating income ÷ Average operating assets = $720,000 ÷ $3,900,000 = 18.5%