Question

The West Division of Cecchetti Corporation had average operating assets of $638,000 and net operating income of $78,000 in August. The minimum required rate of return for performance evaluation purposes is 14%. What was the West Division's minimum required return in August

Answer 1

Answer

Minimum required return in august will be $59320

Explanation:

We have given the west division of Cecchetti Corporation had average operating assets of $638,000

Net operating income = $78000

Minimum required rate of return = 14 % = 0.14

We have to find the minimum required return in august

Minimum required return is given by

Minimum required return = Average assets × minimum return rate

$=\frac{638000\times 14}{100}= 89320$