Gamma Division
the Manager of Gamma Division Projects the Following $$\begin{array} { l l } \text { Sales } & \$ 100,000 \\\text { Operating income } & \$ 30,000 \\\text { Operating assets } & \$ 200,000\end{array}$$

question 97

Multiple Choice

Gamma Division
The manager of Gamma Division projects the following for next year: $$\begin{array} { l l } \text { Sales } & \$ 100,000 \\\text { Operating income } & \$ 30,000 \\\text { Operating assets } & \$ 200,000\end{array}$$ The manager can invest in an additional project that would require $30,000 investment in additional assets and would generate $4,200 of additional income. The company's minimum rate of return is 12%.
-Refer to Gamma Division . What will happen to the company if the manager invests in the additional project?

• A) ROI of the division will increase.
• B) Average investment for will decrease.
• C) Residual income of the division will increase.
• D) There will be no impact on ROI or residual income.

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Definitions:

Clothing Tax

A specific tax imposed on the sale or purchase of clothing, which can vary by jurisdiction.

Proportional Tax

A tax system where the tax rate remains constant regardless of the amount subject to tax.

Federal Income Tax

Tax levied by the national government on the annual income of individuals, corporations, trusts, and other legal entities.

Income Distribution

How a nation's total GDP is distributed amongst its population, often used to analyze economic inequality.