Questions:
For 2012, the New Products Division, of Testar Company, had operating income of $9,700,000 and operating assets of $46,500,000. The New Products Division has developed a potential new product that would require $10,200,000 in operating assets and would be expected to provide $3,100,000 in operating income each year. Testar has set a target return on investment (ROI) of 21% for each of its divisions.
Assuming that the new product is put into production, can the ROI be calculated? If so calculate the division's ROI.