The Current Controllable Margin for Henry Division Is $93000

question 103

Multiple Choice

The current controllable margin for Henry Division is $93000. Its current operating assets are $300000. The division is considering purchasing equipment for $90000 that will increase annual controllable margin by an estimated $15000. If the equipment is purchased what will happen to the return on investment for Henry Division?

• A) An increase of 16.1%
• B) A decrease of 13.3%
• C) A decrease of 3.3%
• D) A decrease of 7.2%

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Definitions:

Corresponding Weights

The proportions or percentages allocated to different assets in a portfolio, determining the impact of each asset's performance on the overall portfolio return.

Correlation Coefficient

A statistical measure that calculates the strength and direction of a linear relationship between two variables on a scatterplot.

Covariance

A measure of how two variables move together, indicating the direction of their linear relationship.

Standard Deviation

A statistical measure that quantifies the variability or dispersion of a set of data points or investment returns around the mean.