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An investment center generated a contribution margin of $400,000, fixed costs of $200,000 and sales of $2,000,000. The center's average operating assets were $800,000. How much is the return on investment

Respuesta :

Answer: 25%

Explanation:

Contribution margin = $400,000

Fixed costs = $200,000

Sales = $2,000,000

Average operating assets = $800,000

The return on investment will be:

= (contribution margin - fixed cost) / average operating assets

= (400000 - 200000) / 800,000

= 200000 / 800000

= 25%

The return in investment is 25%.

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