Answer:
Investments in both divisions are performing equally well at the ROI of 14% each.
Explanation:
The financial data in the question are merged together and they are first sorted before the question is answered as follows:
Consumer ($) Commercial ($)
Sales revenue 22,000 37,000
Divisional income 3,850 3,885
Divisional investment 27,500 27,750
Current liabilities 1,000 800
R&D 1,000 1,000
The answers are now as follows:
Divisional ROI = Divisional income / Divisional investment
Consumer division ROI = $3,850 / $27,500 = 0.1400, or 14%
Commercial division ROI = $3,885 / $27,750 = 0.1400, or 14%
This shows that investments in both divisions are performing equally well at the ROI of 14% each.
