Question

Macey, inc.'s invested assets were $300,000 at the beginning of the year and $400,000 at the end of the year. total revenue was $1,050,000, and net operating income was $70,000. return on investment was blank .

a) 3%
b) 23.3%
c) 20%
d)17.5%

Answer 1

To calculate the return on investment (ROI), divide the net operating income by the average invested assets. In this case, the ROI is 20%. Option C is correct.

Step-by-step explanation:

To calculate the return on investment (ROI), we need to divide the net operating income by the average invested assets.

Net operating income = Total revenue - Total expenses (excluding interest and taxes).

ROI = Net operating income / Average invested assets.

First, we calculate the average invested assets: ($300,000 + $400,000) / 2 = $350,000.

Then, we calculate the ROI: $70,000 / $350,000 = 0.2 or 20%.

Therefore, the correct answer is (c) 20%.

To calculate the return on investment (ROI) for Macey, Inc., we need to use the formula:

ROI = (Net Operating Income / Average Invested Assets) × 100%

The average invested assets can be found by taking the sum of the assets at the beginning and the end of the year and dividing by two:

Average Invested Assets = ($300,000 + $400,000) / 2 = $350,000

Now we can compute the ROI:

ROI = ($70,000 / $350,000) × 100% = 20%

Therefore, the correct answer is c) 20%.