Austin Company has established a target rate of return of 15% for all divisions. For the most recent year, Waterloo Division generated sales of $12,000,000 and expenses of $9,000,000 . Total assets at the beginning of the year were $7,000,000 and total assets at the end of the year were $9,000,000. Refer to Austin Company. For the most recent year, what was Waterloo Division's return on
investment?
a. 18.75%
b. 33.33%
c. 37.50%
d. 42.86%
C
ROI = Net Income/Average Total Assets
= $(3,000,000/8,000,000)
= 37.50%
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