Question

Mycrux Company had the following information:

Asset base in Mycrux Company $987,500
Net income in Mycrux Company $105,700
Weighted average cost of capital 12%
Target return on investment (ROI) 15%
Margin for Mycrux Company 20%
What is the return on investment of Mycrux Company? (Round the answer to two decimal places.)

Answer 1

10.70%

Step-by-step explanation:

Data provided in the question:

Asset base in Mycrux Company = $987,500

Net income in Mycrux Company = $105,700

Weighted average cost of capital = 12%

Target return on investment (ROI) = 15%

Margin for Mycrux Company = 20%

Now,

Return on investment of Mycrux Company =
`\frac{\textup{Net income in Mycrux Company}}{\textup{Asset base in Mycrux Company}}*100\%`

or

Return on investment of Mycrux Company =
`\frac{\textup{105,700}}{\textup{987,500}}*100\%`

or

Return on investment of Mycrux Company = 0.1070 × 100%

= 10.70%