Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. paula boothe, president of the grouper corporation

Paula Boothe, president of the Grouper Corporation, has mandated a minimum 11% return on investment...

60.1K

Verified Solution

Question

Accounting

Paula Boothe, president of the Grouper Corporation, has mandated a minimum 11% return on investment for any project undertaken by the company. Given the companys decentralization, Paula leaves all investment decisions to the divisional managers as long as they anticipate a minimum rate of return of at least 13%. The Energy Drinks division, under the direction of manager Martin Koch, has achieved a 16% return on investment for the past three years. This year is not expected to be different from the past three. Koch has just received a proposal to invest $2,600,000 in a new line of energy drinks that is expected to generate $390,000 in operating income.

(a)

Calculate the return on investment expected on the new line of energy drinks. (Round answer to 1 decimal place, e.g. 5.1%.)

Return on Investment enter the return on investment in percentages rounded to 1 decimal place %

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students