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6 February, 12:19

The Consumer Products Division of Mickolick Corporation had average operating assets of $510,000 and net operating income of $42,000 in August. The minimum required rate of return for performance evaluation purposes is 8%. What was the Consumer Products Division's minimum required return in August? $3,360 $42,000 $44,160 $40,800

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  1. 6 February, 13:15
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    The Consumer Products Division's minimum required return in August was $40,800

    Explanation:

    For computing the minimum required return, the following equation is used.

    Minimum required rate of return = Net operating income : Average operating assets

    8% = Net operating income : $510,000

    8% * $510,000 = Net operating income

    Net operating income = $40,800

    or Minimum required rate of return = $40,800

    For computation part, the net operating income is irrelevant so it is not considered.

    Thus, the Consumer Products Division's minimum required return in August was $40,800
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