Paula Boothe, president of the Grouper Corporation, has mandated a minimum 11% return on investment...
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Paula Boothe, president of the Grouper Corporation, has mandated a minimum 11% return on investment for any project undertaken by the company. Given the companys decentralization, Paula leaves all investment decisions to the divisional managers as long as they anticipate a minimum rate of return of at least 13%. The Energy Drinks division, under the direction of manager Martin Koch, has achieved a 16% return on investment for the past three years. This year is not expected to be different from the past three. Koch has just received a proposal to invest $2,600,000 in a new line of energy drinks that is expected to generate $390,000 in operating income.
(a)
Calculate the return on investment expected on the new line of energy drinks. (Round answer to 1 decimal place, e.g. 5.1%.)
Return on Investment
enter the return on investment in percentages rounded to 1 decimal place %
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