Pendant Publishing reported the following results for its Textbook Division:
Pendant's target rate of return is 15% and the weighted average cost of capital is 10%.Its effective tax rate is 35%.
What is the Textbook Division's Return on Investment (ROI) ?
Definitions:
Average Accounting Return
A measure of profitability calculated as the average net income divided by the average book value of investment over a period.
Annual Net Incomes
The total profit of a company after all expenses and taxes have been deducted from revenues for one year.
Salvage Value
The estimate of an asset's worth at the end of its useful life.
Average Accounting Return
A financial ratio that measures the net profit of a project or investment as a percentage of its initial cost.
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