Answer:
8.36% Increase
Explanation:
Calculation to determine what will happen to the return on investment for Henry Division
First step is to determine the return on investment using this formula
Return on investment = (Controllable margin ÷ Operating assets) × 100
Let plug in the formula
Return on investment= ($48,000 ÷ $300,000) × 100
Return on investment= 16%
Second step is to determine the new controllable margin
New controllable margin= $90,000 + $5,000
New controllable margin= $95,000
Third step is to calculate the new operating assets
New operating assets= $300,000 + $90,000
New operating assets= $390,000
Fourth step is to calculate new return on investment
New return on investment = ($95,000 ÷ $390,000) × 100
New return on investment =24.36%
Now let determine what will happen to the return on investment for Henry Division
Return on investment = 16% - 24.36%
Return on investment= 8.36% Increase
Therefore what will happen to the return on investment for Henry Division will be 8.36% Increase.
