For its three investment centres, Stahl Company accumulates the following data: Centre I Centre II Centre III Sales $1,971,600 $4,003,000 $3,944,000 Controllable margin 788,640 2,346,970 3,643,800 Average operating assets 4,929,000 8,093,000 12,146,000 The centres expect the following changes in the next year: Centre I a 20% increase in sales; Centre II a $323,720 decrease in costs; and Centre III a $485,840 decrease in average operating assets. Calculate the expected return on investment for each centre. Assume Centre I has a contribution margin percentage of 80%. (Round ROI to 2 decimal places, e.g. 1.57%.) Centre I Centre II Centre III The expected return on investment % % %

For its three investment centres, Stahl Company accumulates the following data: Centre I Centre II Centre III Sales $1,971,600 $4,003,000 $3,944,000 Controllable margin 788,640 2,346,970 3,643,800 Average operating assets 4,929,000 8,093,000 12,146,000 The centres expect the following changes in the next year: Centre I a 20% increase in sales; Centre II a $323,720 decrease in costs; and Centre III a $485,840 decrease in average operating assets. Calculate the expected return on investment for each centre. Assume Centre I has a contribution margin percentage of 80%. (Round ROI to 2 decimal places, e.g. 1.57%.) Centre I Centre II Centre III The expected return on investment % % %

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 4P

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	Centre I	Centre II	Centre III
Sales	$1,971,600	$4,003,000	$3,944,000
Controllable margin	788,640	2,346,970	3,643,800
Average operating assets	4,929,000	8,093,000	12,146,000