Alpha Division Had the Following Information: Suppose the Asset Base

question 106

Multiple Choice

Alpha Division had the following information: Suppose the asset base is decreased by $200,000,with no other changes.What would be the return on investment of Alpha Division?
$$\begin{array} { l r } \text { Asset base in Alpha Division } & \$ 800,000 \\\text { Net income in Alpha Division } & \$ 100,000 \\\text { Cost of capital } & 12 \% \\\text { Target ROI } & 15 \% \\\text { Margin for Alpha Division } & 20 \%\end{array}$$

• A)16.7%
• B)62.5%
• C)100.0%
• D)600.0%

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