Question

The following information relates to last year's operations at the Legumes Division of Gervani Corporation: Minimum required rate of return 6% Return on investment (ROI) 6.8% Sales $ 870,000 Turnover (on operating assets) 2 times What was the Legume Division's net operating income last year

Answer 1

Based on the information given, Legume Division's net operating income last year will be $29580.

Firstly,we will calculate the turnover which will be:

= Sales / Operating costs

= $870000 / 2

= $435000

The return on investment will be:

= Net operating income / Operating assets

Therefore, the net operating income will be:

= $435000 × 6.8%

= $29580

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