Copyright

The Consumer Products Division of Weiter Corporation had average operating assets of $570,000 and...

Question:

The Consumer Products Division of Weiter Corporation had average operating assets of $570,000 and net operating income of $65,100 in March. The minimum required rate of return for performance evaluation purposes is 12%.

What was the Consumer Products Division's minimum required return in March?

a) $76,212

b) $65,100

c) $68,400

d) $7,812

Required Rate of Return:

The required rate of return shows the amount of return earned by the investor for every $1 of investment made. This minimum required return is the amount of income needed so that the investor is willing to invest.

Answer and Explanation:

Let us compute the minimum required return. The formula is:

  • Minimum required return = Average operating assets x Minimum required rate of return
  • Minimum required return = $570,000 x 12% = $68,400

The minimum required return is c) $68,400.


Learn more about this topic:

Loading...
Required Rate of Return (RRR): Formula & Calculation

from Financial Accounting: Help and Review

Chapter 1 / Lesson 31
37K

Related to this Question

Explore our homework questions and answers library