2A2R INTERSTATE MOTORS HAS DECIDED TO MAKE AN ADDITIONAL INVESTMENT I...

67.

CSO: 2A2d

LOS: 2A2r

Interstate Motors has decided to make an additional investment in its operating assets

which are financed by debt. Assuming all other factors remain constant, this increase in

investment will have which one of the following effects?

Operating

Return on

Income

Operating

Operating

Margin

Asset Turnover

Assets

a.

Increase

No change

Increase.

b.

No change

Decrease

Decrease.

c.

No change

Increase

Decrease.

d.

Decrease

Decrease

Decrease.