The income from operations and the amount of invested assets in each division of Devon Industries are as follows:     Income from Operations Invested Assets Sporting Goods Division $163,800 780,000 Health Care Division 61,200 340,000 Commercial Division 48,000 300,000 a

a. The formula for calculating the rate of return on investment (ROI) is:

ROI=IncomefromoperationsInvestedassetROI=IncomefromoperationsInvestedasset

Note: Income from operations is the net profit of a company or the difference between the gross profit and the expenses incurred. Invested assets are the assets bought to produce extra income in the future.

Based on our problem, the rate of return on investment for the divisions are as follows:

Sporting goods division: 21%

ROI=163,800780,000=0.21ROI=163,800780,000=0.21

Health care division: 18%

ROI=61,200340,000=0.18ROI=61,200340,000=0.18

Commercial division: 16%

ROI=48,000300,000=0.16ROI=48,000300,000=0.16

b. The most profitable per dollar invested can be found in the sporting goods division. Even though the sporting goods division has the highest invested assets, it still generates a higher profit than the other divisions. Based on our ROI calculations, we see that the sporting goods division has the highest percentage. Therefore, the sporting goods division is the most profitable for every dollar invested.