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ROI of project and determination

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Oakley Co. produces pipes.
Oakley Co. operating results include:
Controllable margin, $150,000
Sales revenue, $1,200,000
Operating assets, $500,000

Oakley Co. is considering a project with sales of $120,000, expenses of $84,000, and an investment of $180,000. Oakley Co. required rate of return is 15%. Should Oakley Co. accept this project?

Instructions:
Compute the division's current ROI, the ROI of the project, and determine if Oakley Co. should accept this project based on the above data.

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Solution Summary

Response provides steps to compute the ROI of project and determination.

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Division's current ROI= Controllable Margin/Operating ...

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