The Consumer Products Division of Goich Corporation had average operating assets of $440,000 and net operating income of $48,500 in May. The minimum required rate of return for performance evaluation purposes is 11%. What was the Consumer Products Division's minimum required return in May

Question

Rambo

Business

9 August, 03:22

The Consumer Products Division of Goich Corporation had average operating assets of $440,000 and net operating income of $48,500 in May. The minimum required rate of return for performance evaluation purposes is 11%. What was the Consumer Products Division's minimum required return in May

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Nona · Answer 1

11.02%

Explanation:

The rate of return is the ratio of the operating income to the average operating assets. It gives insights into how much income was generated for each $1 invested in assets.

Given that the Corporation had average operating assets of $440,000 and net operating income of $48,500 in May, the required return in May

= $48,500/$440,000 * 100%

= 11.02%