Grady Corporation provides the following financial information
Minimum acceptable operating income $556,600
Average total assets $2,000,000
Operating income $708,000
Return on investment 35.40%
Net sales $900,000
Calculate the target rate of return. (Round your answer to two decimal places.)
A) 27.83%
B) 78.67%
C) 35.40%
D) 61.84%
A .A) Minimum acceptable operating income = Target rate of return x Average total assets
Target rate of return = Minimum acceptable operating income / Average total assets = $556,600 / $2,000,000 = 27.83%
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