The Following Information Pertains to the Three Divisions of Borraw

question 102

Multiple Choice

The following information pertains to the three divisions of Borraw Company:
$\begin{array}{lrr} & \text { Division A } & \text { Division B } \\\text { Sales } & ? & 1,250,000 \\\text { Net operating income } & \$ 25,000 & \$ 75,000\\\text { Average operating assets } & ? & ? \\\text { Return on investment } & 20 \% & 15 \% \\\text { Margin } & 0.05 & ? \\\text { Turnover } & ? & ? \\\text { Target ROI } & 12 \% & 10 \%\end{array}$
-Refer to the Figure.What are the average operating assets for Division B?

• A)$5,000
• B)$25,000
• C)$125,000
• D)$208,333

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Definitions:

Interest

The cost of borrowing money, typically expressed as an annual percentage rate, or the earnings from lending money.

Fixed-Rate Mortgage

A mortgage loan with an interest rate that remains unchanged for the entire term of the loan.

Adjustable Rate

This term often refers to a type of interest rate on a loan that can fluctuate over time, usually in accordance with a specified financial index.

Foreclosure

A legal process by which a lender attempts to recover the balance of a loan from a borrower who has stopped making payments to the lender by forcing the sale of the asset used as the collateral for the loan.