Cabell Products is a division of a major corporation. Last year, the division posted total sales of $25,540,000, net operating income of $1,277,000 and average operating assets of $7,151,200. The company's minimum required rate of return is 16%. The division's return on investment (ROI) is closest to:
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To calculate the return on investment (ROI), use the formula:
ROI = Net Operating Income / Average Operating Assets *100
Given:
Net Operating Income = $1,277,000
Average Operating Assets = $7,151,200
ROI= 7,151,200 / 1,277,000 ×100
ROI = 17.84%
Therefore, the division's return on investment (ROI) is closest to 17.84%.