The current income of an investment center is $42,000. its current invested capital is $280,000. if the sales margin is increased to 8% and the capital turnover remains constant at 3, what will be the investment center's new return on investment (roi)?

24%

Explanation:

Data provided:

Current income of the company = $ 42,000

Current invested capital = $ 280,000

sales margin = 8%

capital turnover = 3

thus,

sales = capital invested × capital turnover

or

sales = $ 280,000 × 3 = $ 840,000

Thus,

the new sales margin = 8 % of the sales = 0.08 × $ 840,000 = $ 67,200

therefore,

the return on investment = ( new sales margin / Amount invested) × 100%

or

the return on investment = ( $ 67,200 / $ 280,000 ) × 100% = 24%

in 2001, dell computer became the world’s largest personal computer vendor, continuing to

gain market share and post profits in an industry struggling with slumping sales and billions of

dollars in losses. dell sells 90% of its pcs directly to the final customer, largely bypassing the

reseller channel that accounts for most of the world’s pc sales. this direct customer relationship

is the key to dell’s business model, and provides distinct advantages over the indirect sales

model. dell’s direct relationship with the customer allows it to tailor its offerings to customer

needs, offer add-on products and services, and use the internet to offer a variety of customer

services. in addition, dell’s pcs are built to customers’ specifications upon receipt of an order,

giving dell additional advantages over indirect pc vendors who must try to forecast demand and

ship products based on those forecasts. dell’s direct sales and build-to-order model has achieved

superior performance in the pc industry in terms of inventory turnover, reduced overhead, cash

conversion, and return on investment (kraemer, et al., 2000).

explanation:

previous business sales - c.