You must prepare a return on investment analysis for the regional manager of Fast & Great Burgers. This growing chain is trying to decide which outlet of two alternatives to open. The first location (A) requires an average $1,000,000 investment and is expected to yield annual net income of $160,000. The second location (B) requires an average $600,000 investment and is expected to yield annual net income of $108,000. Compute the return on investment for each Fast & Great Burgers alternative. Using return on investment as your only criterion, which location (A or B) should the company open? (The chain currently generates an 18% return on total assets.)
You must prepare a return on investment analysis for the regional manager of Fast & Great Burgers. This growing chain is trying to decide which outlet of two alternatives to open. The first location (A) requires an average $1,000,000 investment and is expected to yield annual net income of $160,000. The second location (B) requires an average $600,000 investment and is expected to yield annual net income of $108,000. Compute the return on investment for each Fast & Great Burgers alternative. Using return on investment as your only criterion, which location (A or B) should the company open? (The chain currently generates an 18% return on total assets.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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You must prepare a
chain is trying to decide which outlet of two alternatives to open. The first location (A) requires an average
$1,000,000 investment and is expected to yield annual net income of $160,000. The second location (B) requires
an average $600,000 investment and is expected to yield annual net income of $108,000. Compute the return on
investment for each Fast & Great Burgers alternative. Using return on investment as your only criterion, which
location (A or B) should the company open? (The chain currently generates an 18% return on total assets.)
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