Question

Two investment centers at Marshman Corporation have the following current-year income and asset data: Investment Center A Investment Center B Investment center income $ 415,000 $ 525,000 Investment center average invested assets $ 2,400,000 $ 1,950,000 The return on investment (ROI) for Investment Center B is:

Answer 1

The return on investment for Investment Center B is of 26.92%.

Step-by-step explanation:

The general formula for calculating the return on investment (ROI) is:

`ROI= (Cashflow)/(Investment) * 100`

In this exercise the cashflow is given by the yearly income from each investment, while the asset data gives us the value of the investments.

For investment center A we have that:

ROI =
`(415000)/(2400000) * 100` = 17.29%

While for investment center B we have:

ROI =
`(525000)/(1950000) * 100` = 26.92%

Since we’re only interested in the affairs of investment center B we use the results we have obtained from the second equation to answer the question: the return on investment for the investment center B is of 26.92%.