The New Products Division of Testar Company Has Developed a Potential

question 40

Multiple Choice

The New Products Division of Testar Company has developed a potential new product that would require $8,500,000 in operating assets and would be expected to provide $1,400,000 in operating income each year.Testar has set a target return on investment (ROI) of 16% for each of its divisions.Which of the following statements is accurate?

• A) The new product is acceptable because it will yield an ROI that is higher than the target ROI and will yield residual income of $40,000.
• B) The new product will yield residual income of $45,000.
• C) The new product will decrease the companywide ROI.
• D) The new product is unacceptable because it will yield an ROI that is lower than the target ROI.

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Definitions:

Population Size

The total number of individuals or units within the defined group being studied.

Subscription Service

A business model where customers pay a recurring price at regular intervals to access a product or service.

Sampling Frame

The list or actual representation from which a sample is drawn, ideally including the entire target population.

Census

An official count or survey of a population, often including various details of individuals, such as age, sex, and occupation.