Assume the Apple Division of the Gala Company Had the Following

question 126

Multiple Choice

Assume the Apple division of the Gala Company had the following results last year.
$\begin{array}{|l|r|}\hline\text { Sales } & \$ 3,000,000 \\\hline \text { Operating income } & 500,000 \\\hline \text { Total as sets (average) } & 4,500,000 \\\hline \text { Current liabilities } & 300,000\\\hline\end{array}$
Management's required rate of return is 10% and the weighted average cost of capital is 8%. Its effective tax rate is 30%.
-What is Apple division's return on investment?

• A) 11.11%
• B) 16.67%
• C) 66.67%
• D) 60.00%

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Definitions:

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The additional return demanded by investors for holding assets that are not easily convertible into cash without a significant loss in value.

Savings Equals Investment

A principle in macroeconomics indicating that within an economy, total savings in a period must equal total investments.

Economic Principle

A fundamental concept or guiding theory that forms the basis of economic analysis and decision-making.

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