Question

The south division of kent co. has current revenues of $80,000 and current operating expenses of $20,000. the south division's operating assets amount to $400,000. what is south division's current return on investment (roi)?

a) None of the above
b) 20%
c) 25%
d) 15%

Answer 1

The correct answer to the student's question is: (d) 15%. The Return on Investment (ROI) for the South Division of Kent Co. is 15%, which is calculated by dividing the division's Net Operating Income by its Operating Assets and expressing it as a percentage.

Step-by-step explanation:

The Return on Investment (ROI) is a performance measure used to evaluate the efficiency of an investment or to compare the efficiency of several different investments. To calculate the South Division's ROI, we need to divide the division's Net Operating Income (NOI) by the Operating Assets and then multiply by 100 to get a percentage.

The Net Operating Income is calculated by subtracting Operating Expenses from Revenues. In this case, the NOI is $80,000 (Revenues) - $20,000 (Operating Expenses) = $60,000. Next, we divide this NOI by the Operating Assets of $400,000: $60,000 / $400,000 = 0.15. When expressed as a percentage, this is 15%, which is the ROI for the South Division.