Fleur De Lys Segment of Windy's Restaurants Is an Investment

question 167

Multiple Choice

Fleur de Lys Segment of Windy's restaurants is an investment centre.The manager is considering two possible expansion alternatives.The required investments, controllable margins, and the ROIs of each expansion project are as follows: $$\begin{array} { l c c c } \text { Project } & \text { Investment } & \text { Controllable Margin } & \text { ROl } \\\text { Power } & \$ 75,000 & \$ 15,000 & 20 \% \\\text { Super } & 330,000 & 56,100 & 17 \%\end{array}$$ The investment centre is currently generating an ROI of 15% based on $700,000 in operating assets and a controllable margin of $105,000.Which one of following projects will increase Fleur de Lys Segment's ROI?

• A)both Power and Super
• B)only Power
• C)only Super
• D)neither Super nor Power

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Definitions:

Present Value

The contemporary estimate of a future monetary sum or cash flows, evaluated with a given return rate.

Investment Projects

Initiatives or plans undertaken by individuals or organizations to allocate resources with the expectation of generating future profits.

Budget Set

The collection of all possible bundles of goods and services that a consumer can afford given their income and the prices of goods.

Interest Rate

The amount of a loan that is subject to interest charges for the borrower, typically expressed as an annual percentage of the current loan balance.