Use the Following Information to Answer Question Waverly Company Has Set a Target Return on Investment (ROI)

question 75

Essay

Use the following information to answer Question. The Furniture Division of Waverly Company reports the following results for 2012: $$\begin{array} { l l } \text { Revenues } & \$ 400,000 \\\text { Operating expenses } & \$ 360,000 \\\text { Operating income } & \$ 40,000 \\\text { Operating assets } & \$ 500,000\end{array}$$
Waverly Company has set a target return on investment (ROI) of 12% for the Furniture Division.
Assume that the Furniture Division believes that it can reduce operating expenses by $25,000. If revenues and operating assets stay at the same level, what would the division's ROI be? Would it reach its target ROI?

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Definitions:

Battle Of Monongahela

A battle in 1755 during the French and Indian War where British forces were defeated by French and Native American forces near the Monongahela River.

French And Indian War

A conflict between France and Britain from 1754 to 1763 in North America, part of a larger series of conflicts known as the Seven Years' War.

German Immigrants

People from Germany who moved to another country, historically significant in the United States for their contributions to its culture, economy, and population.