Response to the following problem:
With annual sales of $4,800,000 and operating assets of $3,200,000, Nolan Company achieved a 10 percent ROI.
Required:
a. If Nolan reduces expenses by $80,000 and sales remain unchanged, what ROI will result?
b. If Nolan cannot change either sales or expenses, what change in the investment base is required to achieve the same result you calculated for Requirement a?