The Superior Equipment Company produces a wide variety of outdoor sports equipment. Its newest division, Golf Technology,

Fantastic news! We've Found the answer you've been seeking!

Question:

The Superior Equipment Company produces a wide variety of outdoor sports equipment. Its newest division, Golf Technology, manufactures and sells a single product: AccuDriver, a golf club that uses global positioning satellite technology to improve the accuracy of golfers' shots. The demand for AccuDriver is relatively insensitive to price changes. The following data are available for Golf Technology, which is an investment centre for Superior Equipment:

Golf technology data

Total annual fixed costs

$27,500,000

Variable cost per AccuDriver

$380

Number of AccuDrivers sold each year

130,000

Average operating assets invested in the division

$49,000,000

Required

1.	Compute Golf Technology's ROI if the selling price of AccuDrivers is $670 per club.
2.	If management requires an ROI of at least 20% from the division, what is the minimum selling price that the Golf Technology Division should charge per AccuDriver club?
3.	Assume that Superior Equipment judges the performance of its investment centers on the basis of RI rather than ROI. What is the minimum selling price that Golf Technology should charge per AccuDriver if the company's required rate of return is 18%?

Requirement 1. Compute Golf Technology's ROI if the selling price of AccuDrivers is $670 per club.

Determine the formula used to calculate ROI, and then calculate the ROI for Golf Technology. (Enter the ROI as a percentage, rounded to the nearest hundredth percent, X.XX%.)

Provide correct answers.