The Management of a large company is debating an investment.
Management projects the investment will earn $100,000 annually. In
addition, the investment will require the company to purchase
$600,000 in assets. Management’s decision is summarized in the
following chart:
Before Investment
After Investment
Operating income
600,000
700,000
Average operating assets
3,000,000
3,600,000
Required:
1. Assume Management is evaluated based on growth in the
company’s ROI. Compute the Return on Investment for the company
before and after the investment. Would you...