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7 February, 07:12

The Clydesdale Company has sales of $4,500,000. It also has invested assets of $2,000,000 and operating expenses of $3,600,000. The company has established a minimum rate of return of 7%. What is Clydesdale Company's rate of return on investment?

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  1. 7 February, 08:57
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    45%

    Explanation:

    Given that,

    Sales = $4,500,000

    Invested assets = $2,000,000

    Operating expenses = $3,600,000

    Minimum rate of return = 7%

    Operating profit of the company:

    = Sales - Operating expenses

    = $4,500,000 - $3,600,000

    = $900,000

    Therefore, the rate of return on investment is as follows:

    = Net operating income : Invested assets

    = $900,000 : $2,000,000

    = 45%
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